Archives for August 2020

Workers Comp Recorded Statements – Now A Lost Art?

August 27, 2020 By JL Risk Management Consultants

Whatever Happened to Workers Comp Recorded Statements?

Not too long ago, workers comp recorded statements appeared in every file where the injured worker received any type of weekly comp benefits – a mailed check.

picture of workers comp recorded statement reel to reel

Wikimedia Commons – Amanda Vincent-Rous

Workers Comp Recorded Statement Requirements

Some of the requirements were:

a recorded statement of the injured employee within 24 hours (even weekends) of receiving the First Report of Injury – unless they were represented by an attorney. I even took them with the attorney on the phone or in-person
preferably in-person if you were a local on-the-road adjuster
a recorded or written statement by any witnesses of the accident as soon as possible (72 hours maximum)
the adjuster used a guide provided by the TPA or insurance carrier. I still have a flipbook guide somewhere. I took statements for any type of claim, not just WC.
do not make them confrontational or accusatory
a more involved statement if there was any subrogation potential such as an auto accident
not for medical only claims in most cases

Written statements were also allowed but they usually ended up being so time-consuming. When the accident occurred in another state, you could assign an outside firm’s adjuster to take the statement for you if an in-person statement was required. In-person statements turned out to be much better than over the phone.

Recorded Statements Faded – 1990s

Black Old workers comp recorded statements tape

Wikimedia Commons – Stilfehler

Workers comp recorded statements reduced quickly in the 1990’s – as did most other lines of insurance. The last time I remember recorded states being taken was when I consulted for a health and workers comp insurer. The statements, though, were too accusatory – a written guide and standards were needed at the time. This was 1996 – yes, 24 years ago.

Some forward-thinking employers and governmental organizations heavily investigate any type of accident or insurance claim. I have seen a few written statements taken by these groups.

Now that I consult on files, I never see recorded statements taken by the adjusters. Yes, the good adjusters still verify the accident with the employer, employee, and medical treatment facility. Their three-point contact is performed ASAP. After all, a claim is basically over in 48 hours – check the link.

Legality of Recorded Statements

Many times, when I bring this up at conferences or a presentation with claims or risk management department personnel, some of them have responded with recorded statements being frowned up or illegal in their respective adjusting states.

I usually respond back – then why is a guide for taking written or recorded statements still in your claims adjusting manual provided to adjusters the first day on the job?

If any carriers or TPA’s are still taking workers comp recorded statements, please let me know in the comments section or let me know at the contact us page. Thanks.

©J&L Risk Management Inc Copyright Notice

Workers Comp Mega Claims – My Different Definition

August 27, 2020 By JL Risk Management Consultants

Workers Comp Mega Claims From A Claims Standpoint

A meeting notice caused me to write this article on Workers Comp mega claims. If you have not signed up for the webinar and you have anything to do with workers’ compensation, please go here and sign up. Yes, I registered earlier this week.

workers comp mega claims 250000 banknote

Public Domain

Attending the webinar will be worth your time (trust me). Multiple workers comp rating bureaus rarely work on the same statistical study. The 39-page report can be found here. (PDF file). The conclusions can be found on Page 23. You can tell the actuaries have been busy when the Appendices cover 16 pages.

The rating bureaus that contributed to the report and webinar are:

California’s WCIRB
Indiana Compensation Rating Bureau
Minnesota Workers Comp Insurance Association
New Jersey Compensation Rating and Inspection Bureau
North Carolina Rate Bureau
Delaware Compensation or Rating Bureau
Compensation Advisory Organization of Michigan
NCCI
New York Compensation Insurance Rating Bureau
Pennsylvania Compensation Rating Bureau

Differing Definitions of Workers Comp Mega Claims

Magyar Visla Male dog workers comp mega claims in the forest

Wikimedia Commons – Markgraf1508

In my little corner of the workers’ compensation world, any claim that has over a $250,000 Total Incurred represents a mega claim. According to the above report, a claim that reaches $3,000,000 in incurred benefits becomes a mega claim. The rating bureaus Total Incurred, and your loss runs Total Incurred usually represent two different figures. Check here for the difference.

Most of the claim departments refer to these claims as “old dogs.” A claim value does not reach $3,000,000 that quickly. This sounds like quite a definition discrepancy. That assumption would be correct.

Why Only $250,000 For A Mega Claim?

The $250,000 incurred level usually causes certain requirements from the claims adjusting staff. Some of them are:

The reserves have now reached the Vice President level – more reporting required than just internal file notes and documentation.
The reinsurance or excess insurance companies now need reports – usually on a prescribed form and some of the claims department internal documentation. Their funds are now at risk.
The claim or set of claims are now subject to a possible audit by the reinsurer.
Some states require reports after a claim reaches a certain incurred level
The insured employer or TPA client now needs more formal reports
The agent and underwriting department may require reports
The claims diary system may be shortened -more supervisory and managerial reviews
Subrogation must be followed – if you look at the above PDF report, a large % of workers comp mega claims are vehicular accidents
Litigation reports must be generated as most of the mega claim claimants are represented by an attorney.

All the above bullet points generate diary items for the life of the claim. The requirements are not “one-off” reports – usually due every 90 days.

What Causes Mega Claims?

Venice beach workers comp mega claims hit and run

Wikimedia Commons – WiLPrZ

I reviewed a claim this week that involved a hit-and-run auto accident where the Total Incurred sits at almost $1 million. The claim is five years old. The largest claims I have seen are:

Auto accidents
Falls
Severe burns
Occupational disease such as mesothelioma

The injured workers often required multiple surgeries which drove the medical costs to much higher incurred levels very quickly.

The likely minimum amount for a workers comp mega claim should be adjusted up in the near future. The $250,000 level has been in place for many years.

©J&L Risk Management Inc Copyright Notice

Workers Comp Ladder of Insurance Very Important Term in 2020

August 20, 2020 By JL Risk Management Consultants

Workers Comp Ladder of Insurance – Subs of Subs Become Employees

Early in my career, my insurance company employer sent me to what was a whirlwind of legal terms and concepts known as subrogation. I took notes until my arm cramped with pain as I know this was important information. The notebook full of notes became two terms that I coined and copyrighted the Ladder of Insurance (c) and Workers Comp Ladder of Insurance (c).

picture workers comp ladder of insurance

Wikimedia Commons – Armando

The two terms seem similar. They are very similar in some respects but differ in others. I had originally coined the Decision Tree of Insurance Liabilities (c). That term sounded too convoluted. Let us look at the Work Comp term now.

Ghost Policies Become Lessons for Micro Companies

A phone call came in two days ago. Many times, J&L is mistaken for an insurance agency. We are not agents. We receive these calls more often now that entrepreneurs. The caller – a painting company – requested a policy where the owner is the only person insured under the policy and then he would be excepted out as owner.

These are called ghost policies. Some states have outlawed their use. We receive at least 30 calls a year from company owners that have these types of policies. One of two incidents have occurred – either (or both):

An uninsured subcontractor was injured
The insurance carrier performed an audit and wants premium for the uninsured subcontractors.

Let us center in on #1 of the two. By the way, how prevalent is this situation? Check out this older article that pointed out 30,000+ companies with no workers comp insurance operating in North Carolina 10 years ago. (Yes, 30,000)

Workers Comp Ladder of Insurance and The Court Systems

The ladder workers comp ladder of insurance of life

Wikimedia Commons – Mykl Roventine

The Workers Comp Ladder of Insurance or Ladder of Insurance points to one opinion that should be considered a fact. A Workers Comp Judge, (Commissioner) or Court of Appeals usually will go up the Ladder of Insurance to see if there are any insurance coverages available to an injured contractor or employee.

Self-insured should take notice of this concept – self-insurance counts as a policy of insurance.

This is Risk Management – not legal advice. The risk of a subcontractor of a subcontractor or a subcontractor being an employee becomes a real risk – even if you thought or were told that the subcontractor was insured.

Certs Become Critical – Yet May Be Worthless

FEMA contractor workers comp ladder of insurance to install a water

Wikimedia Commons – Amanda Bicknell

Certs or Certificates of Insurance show who is insured by which insurance carrier. We had a client where this situation occurred – the main contractor was given a cert by the subcontractor that was canceled after the contractor/subcontractor contract was signed.

The subcontractor even supplied a valid subcontract attached to the contract. An injury had occurred, and the injured subcontractor’s subcontractor filed a claim with the client’s carrier.

The carrier denied the claim originally – the Workers Comp Commission ruled the client’s carrier owed benefits, so now the carrier requested premium to cover all the client’s subcontractors – even for the ones with valid certificates of insurance.

The easiest way to avoid this situation can be found at the previous Certificates of Insurance link above.

©J&L Risk Management Inc Copyright Notice

Automated Workers Comp Medical Only Claims Not A Solution Yet

August 20, 2020 By JL Risk Management Consultants

Automated Workers Comp Medical Only Claims vs. Human Intervention

Two different presenters this month spoke on automated workers comp medical only claims. In fairness to the presenters, I will not mention their names or companies. Their presentations were better than most that I have seen on this subject.

The ideas of claims automation claim analytics and other “no-touch” claims adjusting, and processing have been discussed since the mid-1980s. Unfortunately, worker’s compensation has not been able to advance as much as health or other lines of insurance since that time.

The Tick Tick Medical Only Claims

Automated Workers Comp medical only claims caught my attention in 2005 when a monopolistic state fund was using a fully automated system – even to set reserves and to send out forms, letters, and to accomplish other daily “mundane” adjuster tasks.

Two members of the Workers Comp press interviewed me on my article. One reporter agreed with me, the other one not so much.

The system was scrapped in 2008 as the monopolistic state fund ran into many problems including being severely under-reserved on certain claims and over-reserved on many minor claims. Overall, the fund totals seemed accurate, but the underlying financials made no sense.

The Tick Tick Medical only claims in the above subtitle came from an article I wrote many years ago as a dire warning to medical only claims adjusters, supervisors, managers, insureds, and especially self-insureds.

Any claims person will nod their head that some of the worst claims they have handled originate as minor medical claims. Without any intervention, these claims were paid and closed with problems still existing before and after closure.

Avoid Claims Festering

Medical Automated workers comp medical only Blue stethoscope

Wikimedia Commons – Tachypnoe

Medical only claim festering(c) was a concept and keyword that I coined 15+ years ago. In the late 1990s, I decided to start analyzing any injury, type of claim, or any variable that was most common amongst the worst claims. The claims that reached into my claims authority level (over $75,000) had many similar characteristics.

I covered those in the Six Keys to Workers Comp Cost Savings and even wrote two manuals on them. The one element that popped up repeatedly for the worst of the worst claims overwhelmingly started as untended medical only claims. These claims were inherited from another TPA – they did not occur on my watch.

Why did they not occur on my watch? Each claim had a supervisor, adjuster, and medical only adjuster, along with a claims assistant all look closely at every incoming claim. The claims processing system had a module for automated workers comp medical only claims that we never used on even one claim.

Automated Workers Comp Medical Only Claims – Solution Someday?

I have reviewed a claims processing system over the last week that may be able to at least reduce the amount of “eyes on the small claims.” We shall see how that works out.

©J&L Risk Management Inc Copyright Notice

Workers Comp COVID-19 Numbers Are In – Think Again

August 13, 2020 By JL Risk Management Consultants

Workers Comp COVID-19 Numbers – The System Does Not Work That Way

Many prognosticators and the press have all rushed to publish or make sense of any Workers Comp COVID-19 numbers including claim counts and rating information.

pic of green bananas workers comp covid-19 numbers

Wikimedia Commons – 2DU Kenya24

Unless I missed something over the last 30 years, the numbers are like a green banana. If you are patient and wait for the green banana to ripen, it becomes palatable.

The same can be said for the workers comp COVID-19 numbers. They seem to be a little green presently. I have sat through many webinars on COVID-19 numbers.

The conclusions were the same – we will have to wait and see akin to the banana ripening.

The Calendar Wins Every Time – September 1st/2nd Bellwether

Many articles appear on this website covering the timing of how claim values (Total Incurred) pegs to the Experience Modification Factor. For self-insureds, the calendar is even more delayed for claims valuation by a Loss Development Factor. (LDF).

Hang in there with me as this can be boring – but it can save your company premiums or self-insured over-budgeting. We will make many assumptions – the timing concept is the key.

The earliest claims value appears in any type of Workers Comp rating formula would occur on September 2nd, 2020. Watch the term earliest – it will become HUGE in a few sentences.

The UNIT STAT date becomes important – the day claims are reported to the rating bureaus. So, let us get started.

Policy Date 03/02/2019 to 03/02/2020
Unit STAT Date = 6 months after the policy expiration
Small Assumption – 03/01/2020, the Workers Comp COVID-19 numbers were recognized by the Departments of Insurance and NCCI, WCIRB, and the other rating bureaus
Bummer – you only have one day of COVID reporting numbers recognized by the rating bureaus – think a teeny-weeny tiny amount
Big time bummer – the teeny tiny amount that could have been reported on only the 03/02/2020 claims would not even show up in your Mod until your 03/02/2021 policy (but only one day of claims possible – Egad!)
Think green bananas (see above pic) as most of the COVID-19 numbers would be in your next policy 03/02/2022 – 03/02/2023 – wow that late? (Yes, that late)

1/365th of the Workers Comp COVID-19 Numbers

Work of workers comp covid-19 numbers got delayed

Wikimedia Common – Department of Public Works and Highways

How much data will be available in 19 days? 1/365 and on 9/3 =2/365. Just move the numbers provided in the above list one day ahead. The effect of those numbers will not be starting until 3/2/2021.

Bottom Line – Watch the purveyors or prognosticators of information with such phrases as the numbers are here, etc. They are not unless you can get them from each employer or insurance carrier. Do not eat a green banana, well, unless they are plantains.

An honest opinion came this week from Dave Bellusci, EVP, and Chief Actuary at the WCIRB. When asked about the Workers Comp COVD-19 numbers with respect to rate setting, he said we do not really know right now. Thanks for your honesty, Dave.

©J&L Risk Management Inc Copyright Notice

California Workers Comp Contractor Vote – Prop 22 on Ballot

August 11, 2020 By JL Risk Management Consultants

Uber or Lyft Driver – California Workers Comp Contractor vs Employee – Prop 22

One of the most heated online and in-person (before COVID-19) debates that I had witnessed in California – Is an Uber or Lyft driver a California Workers Comp Contractor or an employee?

picture antique taxi california workers comp contractor

Public Domain – Wikimedia Commons

Some of the most widely read J&L articles over the last year came from the passage of California AB 5. AB 5 slammed the door on gig workers as independent contractors.

From a prior article –

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

The degree of control by the main contractor
The subcontractor performs work that is not the usual work performed by the contractor
The subcontractor has a business that is independently established in the same trade from the contractor
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.

AB 5 reiterated the infamous Dynamex decision. The rule-of-thumb became the ABC decision on a worker’s status. The ABC comes from the first three in the above list.

Why Should You Care If You Do Not Have A Business in CA?

I have referred to this statement often when writing California-based articles. What happens in California will be coming to a state near you or in your state.

California tends to lead the way on some of the Workers Comp decisions by other State Legislators. For instance, not long after the Dynamex decision, Massachusetts enacted similar regulations along with many other states.

Other states have retreaded the California Workers Comp Contractor Dynamex decision many times.

Proposition 22

(19-0026A1)
CHANGES EMPLOYMENT CLASSIFICATION RULES FOR APP-BASED TRANSPORTATION AND DELIVERY DRIVERS. INITIATIVE STATUTE.

Uber drivers in California Workers Comp Contractor can possibly worker

Wikimedia Common – ScottMLiebenson

Establishes different criteria for determining whether app-based transportation (rideshare) and delivery drivers are “employees” or “independent contractors.” Independent contractors are not entitled to certain state-law protections afforded employees—including minimum wage, overtime, unemployment insurance, and workers’ compensation. Instead, companies with independent-contractor drivers will be required to provide specified alternative benefits, including minimum compensation and healthcare subsidies based on engaged driving time, vehicle insurance, safety training, and sexual harassment policies. Restricts local regulation of app-based drivers; criminalizes impersonation of such drivers; requires background checks. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments

California Workers Comp Contractor Vote Results

I will return to this article and update it or write a new one after the vote on Prop 22. One would have to think the results will affect other California contractors and possible employers and contractors nationwide.

©J&L Risk Management Inc Copyright Notice

Telecommuting Employee Accidents – The New Work Comp Paradigm

August 6, 2020 By JL Risk Management Consultants

Telecommuting Employee Accidents – Risk Management and Claims Nightmare?

The Coronavirus pandemic grew what was a “cottage industry” type job to one of the most popular jobs in existence today. Most telecommuting employee accidents will involve in-home hazards.

picture of home office desk for telecommuting employee accidents

Wikimedia Public Domain -rawpixel

Let us look at the:

Previous telecommuter articles – check out the articles I wrote over the last few months on telecommuting employees since the beginning of the pandemic
Definition of a Telecommuting Employee- from the rate bureau(s)
In-home hazards that may cause accidents
Most popular accident type with telecommuters

Telecommuting Employee Definition

On duty Telecommuting employee accidents that works at home

Wikimedia Commons – Flcikr user: perzon seo

The best way to define telecommuting employees comes from the rate bureaus. NCCI’s definition covers approximately 40 states. (with a few state exceptions). The other states have independent rating bureaus. The definition is (paraphrased):

For purposes of Code 8871, a residence office is a clerical work area located within the home of the clerical employee. Additional requirements are that the residence office must be separate and distinct from the location of the employer.

Clerical duties of an employee classified to Code 8871 include but are not limited to the creation or maintenance of financial or other employer records, handling correspondence, computer composition, technical drafting, and telephone duties, including sales by phone.

Telecommuter employees who also engage in duties away from the residence such as depositing funds at banks, the purchase of office supplies, and/or the pickup or delivery of mail are assigned to Code 8871 provided these duties are incidental and directly related to that employee’s duties in the residential office.

California’s rating bureau (WCIRB) has not officially added the telecommuter code to their manuals. The lion’s share of their next meeting covers Class Code 8871. You can check out the next meeting here.

In-home Hazards Could Cause Telecommuting Employee Accidents

According to an article in OMG Top Tens – the following are the Top 10 Hazards and associated employee accidents in a home office.

10. Wet Floor Accidents

9. Tripping on Carpets & Cables

8. Stairway Accidents

7. Burns

6. Injury Caused by Machinery

5. Head Injuries – overhead cabinets

4. Chair-Related Injuries or Accidents

3. Accidents in the Restrooms – can be compensable see next link

2. Glass Accidents

1. Furniture Corners

The most common type of office accident is the one attributed to furniture corners. Sharp table corners should be covered with protective tabs to prevent accidents; placing furniture pieces with rounded edges can help, too.

The #1 most common injury is why I decided to link to and quote the article. We have all seen people injure themselves with furniture corners – sometimes seriously. The overhead cabinets in #5 could have been ranked higher.

A great telecommuter article from SFM pointed out three important considerations in the next two sections:

Coffee or bathroom breaks may be compensable – an office is an office if you designate it as one
A safety plan needs to be in place for telecommuters
A dedicated workstation enhances safety and productivity

Planning for safe remote work

You can prepare for the safety of your remote workers by creating or reviewing your policies and procedures for remote work:

Develop a remote work policy that covers eligibility, safety, equipment, and security
Have the employee sign a remote work agreement, acknowledging their responsibilities
Create a safety checklist or assessment for remote workspaces
Require a dedicated workstation in their home
Consider equipment and security needs
Provide safety training and resources
Follow up on a regular basis to ensure safety procedures are being followed

Safety concerns in home offices

Office at home of Telecommuting employee accidents - can control safety

Wikimedia Common – THOR

As an employer, you can monitor and enforce safety practices at your central office. It becomes more challenging when you do not control your worker’s environment.

Do all you can to ensure that employees’ working spaces meet the minimum criteria for safety. Workers may be more complacent in their own homes, and disregard tripping hazards or poor ergonomics.

A dedicated home workstation is beneficial because, unlike lounging on the couch with a laptop, the workstation can be set up for proper ergonomics. An optimal setup includes:

An appropriate chair and desk
The computer, keyboard, and mouse in the correct positions
A telephone, possibly with a headset
Proper lighting to reduce eye strain
Adequate, accessible storage to eliminate tripping and lifting dangers – these are huge losses when they occur
Awareness about electrical and fire hazards

The above-linked articles have one thing in common. Both were written pre-pandemic. They were not written as a response to any telecommuting employee accidents or current work situation.

How Do I Find Exclusions In My Insurance Policy? Remember DICEE

August 6, 2020 By JL Risk Management Consultants

Exclusions In My Insurance Policy – Look For The First E in DICEE.

The article comes from a reader question – where are the Exclusion in my insurance policy and are they the same as Declarations?

bee sting exclusions in my insurance policy

The answer to the question is no the Exclusions in an insurance policy are not the policy declarations. One of the first terms I learned long ago in one insurance training class is to remember the term DICE like the dice you roll in a board game and then add another E.

DICEE is the acronym for policy sections:

Declarations –most people read only this part of the policy.
Inclusions (Insuring Agreements)
Conditions
Exclusions
Endorsements – your policy can have an unlimited number of these.

Exclusions represent the basic definition of the word –

An exclusion is any loss or damage that isn’t covered by your insurance policy (read: you won’t be able to file a claim for them).

One different aspect of Exclusions is they appear all throughout a policy, not just in the Exclusions section.

Endorsed Exclusions

One area where many unknowledgeable insureds have been stung (hence the picture above) originates with exclusions being added after the policy was purchased from your insurance carrier.

We often receive calls from employers and private citizens asking questions on the policy exclusions that happen due to endorsement.

Many state governments have looked into insurance carriers altering policy provisions policy once the policy has started and the insured has paid their premium.

Read any Endorsed Exclusions very carefully. Use the best policy review tool available (old school) to find out what is contained in any endorsement.

If you ever have any questions, call your agent. I was able to shave off 15% on my car and home policies by sending my agent a note two weeks ago.

Usually, states severely limit the ability to endorse any exclusions after policy inception. Then again, one must ask if an endorsement removes an inclusion, is that not the same as adding an exclusion?

According to Insure.Com, the exclusions in an HO3 – your ordinary Homeowner’s policy are:

HO-3 policy Exclusions

Insurance agreement Exclusions in my insurance policy coverage

Wikimedia Common – Visem

An HO-3 policy is often called a “special form” because it covers everything except certain perils outlined in the policy. It is the most popular type of policy. The standard HO-3 policy contains these exclusions:

Ordinance or law: such as demolition or construction required to bring your house up to code.
Earth movement: such as earthquakes, shockwaves, sinkholes, landslides, and mudflows.
Water damage: such as floods, sewer back-ups, and water that seeps through the foundation. <Please note this Exclusion makes the need for Flood Insurance critical>
Power failure
Neglect: meaning you failed to take reasonable means to save your property during or after a loss.
War: including undeclared war and civil war.
Nuclear hazard
Intentional loss: meaning something you did on purpose with the intent to cause a loss.
Governmental action: such as the destruction, confiscation, or seizure of covered property by any governmental or public authority.
Loss to property: resulting from faulty zoning, bad repair or workmanship, faulty construction materials, and defective maintenance.

Pull out your homeowner’s policy – you will see these under the Exclusion Section. Review your automobile policy, there are many exclusions with autos.

So, the answer to where do I find exclusions in my insurance policy is under the Exclusion section ant throughout the policy, so read it closely.