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Home Ergonomics Advice Reduces Workers Comp Costs

March 4, 2021 By JL Risk Management Consultants Leave a Comment

Home Ergonomics Advice Learned From Recent Webinar 

Recently, I viewed (or should it be attended?) a webinar on home ergonomics advice from TeamErgo that is owned by Mindy Smith.  I have seen her present at least five or six times over the last 15 years.  If you contact her, she may share the whole presentation with you.  

She graciously allowed me to use a few slides from her presentation.  I decided to use three of them to not delve too far into what is an area I know so little about – except that it saves Workers Comp $$ even reducing injuries from home. 

My decision to cover ergonomics came from this post on in-home injuries that went viral a few months ago.

If you think that ergonomics may not be worth the time or effort, then check out how ergonomists reduced Carpal Tunnel Syndrome by 50% in the workplace saving employers millions in workers’ compensation budgets.

Ergonomics is Risk Management in its most basic form – hands-on cost reduction.

If you click on the thumbnails that I provided below, you should be able to see the whole slide.  I will make comments below each slide. All have ErgoSmith as the copyright holder.  Please click the slide as these are thumbnails to see a larger version.

Slide From Home Ergonomics Advice

This slide covers one of the areas that I suffer from often – computer eye fatigue.  I had recently reviewed a claim where the injured worker had a healing torn cornea.   She worked at the computer 15 hours a day at home.  This slide might have prevented that reoccurrence of symptoms.  The injured worker’s claim was reopened with $40k in reserves as she may have needed corrective surgery. 

pic of home ergonomic devices

The advice on how to set up your home workstation/desk is simple yet stress and strain reducing if you sit at a desk at home all day.  This could even apply if/once you return to the office.   I know, stands and footrests seem like expensive options, correct?  Well, then check out slide three on home ergonomics advice – a shocker to me. 

No endorsement of brand or equipment- Amazon(c) 

A laptop-stand for $17 seems reasonable.  I had always thought that ergonomic equipment was extremely costly.  In some Workers’ Comp claims, I have paid 1,000% more for the same items. This slide from TeamErgo and many of the presentations I have seen by Mindy dispute this point very often.  Ergonomics can be reasonably done.  

Conclusion on Home Ergonomics Advice

I think we can call see that good reasonably price home ergonomics is available.   Ergonomics did not stop when your employer transitioned you from an office to home.  

This great home ergonomics advice can prevent you from having a remote workers comp incident. 

Filed Under: Risk Management Tagged With: ErgoSmith, graciously allowed, home ergonomics advice, reoccurrence of symptoms

Workers Comp Predictive Analytics Changed Loss Run Reviews Forever

March 4, 2021 By JL Risk Management Consultants Leave a Comment

Workers Comp Predictive Analytics – Do Not Ignore Old Open Claims 

One of the big changes with loss run reviews started with the carriers and now the whole insurance industry not ignoring the old open claims. Workers Comp predictive analytics has changed how old open claims are evaluated in underwriting. 

picture of workers comp claim analytics Aztec calendar

Public Use Wikimedia License – Keepscases

Years ago, I wrote numerous articles that pointed to only considering claims that were going to be fed into the Experience Mod system.   I even said that predictive systems would not work in workers’ comp.   That statement still stands.  I will cover it in the next heading. 

The scenario has changed so much in the last 10 years that I had to change my advice that I give to claims adjusters, employers, agents, and others. 

Does this discount the Experience Mod system?  No, it does not as the Mod is still the most common way to assess the risk of an employer.  

Times are changing though, on how the Workers Comp insurance industry evaluates employers to underwrite them.  One cannot ignore the Schedule Modification factors that carriers assign to employers. 

Read up here on Schedule Mods as more carriers are using algorithms to calculate your risk factor in addition to looking at your Experience Mod.  Schedule Mods can swing your premiums up to 50% in certain states.  

Two Types of Workers Comp Predictive Analytics 

The two areas of analytics as I view them are pre-claim analytics and post-claim analytics.  Pre-claim analytics seem to work well.  Post-claim analytics have not moved forward that far yet. 

Pre-claim Analytics

Analytics on the front-end of the Workers Comp insurance process has become almost the norm in most underwriting departments.  Carriers, Third Party Administrators, Captives, and other entities that provide coverage can now import the claims data, analyze it, and come up with a score that may vary somewhat from the Experience Mod system. 

Many companies have sold and now sell analytics packages that have simplified the front-end rating processes on insureds.  

Agencies are now more prone to have a set of algorithms that analyze current and potential clients for many types of loss ratios.   

Inside of pre-claim analytics, the old claims count significantly more than with the Experience Mod rating systems used by the rating bureaus (NCCI, WCIRB, etc.).   

Numerous old open claims on a loss run (more than five years old) may have little effect on your E-Mod/X-Mod.  They will have a greater effect on pre-claim analytics.   Closing out the old claims has become more important over time.  

Check out this article on reopened claims causing problems if they are included in any analytic evaluations.  Reopened claims sometimes have the same numbers reset on the claim, as when the claim was originally closed.  These reopened claims can spike an E-Mod or any type of workers comp predictive analytics. 

Post-Claim Analytics 

Post-claim analytics, according to my opinion, attempt to predict claim values using various factors surrounding the claims.  I still have not seen a package that can analyze the healing of the human body with a predicted return to work date or the amount of medical treatment required for a return to gainful employment.   

Over my career, I have reviewed thousands of claims and loss runs.  I have often seen this situation – a group of injured employees have the same:

  • Employer
  • Socioeconomic factors
  • Age, Sex, pre-injury health
  • Treating physician 
  • Injury type
  • Other similar factors. 

The healing and return to work period vary widely for a similar group as the human body does not heal the same.  No algorithm that I have seen predicts the outcome of these claims.  

I still want to be proven wrong.  I have reviewed some of the systems that were good at pre-claim analytics including the level of safety provided to the employees as a predictive factor.   I have not seen one to date taking post-claim data and using it for a model.   

Old Claims Now More Critical – Workers Comp Predictive Analytics 

Workers Comp predictive analytics looks at more of a longer horizon than the usual.  Even most actuarial analyses are giving more weight to older claims.    

In 2010 – 2011 and before, I would usually ignore claims that were more than five years old.  Why should I ask an employer or insurance agency to pay me to close files that made no difference to the Experience Mod or a self-insured Loss Development Factor?  

Any claims that appear on loss runs, including old open claims, now require treatment as if they were open new claims.  Workers Comp predictive analytics now give them much more weight when analyzing an insured. 

Filed Under: predictive analytics Tagged With: Age, front-end rating processes, human body, longer horizon, Socioeconomic factors

Workers Comp COVID-19 Vaccinations – Part of Return To Work

February 25, 2021 By JL Risk Management Consultants Leave a Comment

Employers Require Return to Work Workers Comp COVID-19 Vaccinations?

I started pondering how the Workers Comp COVID-19 vaccination process would work if an employee were returning to work with or without vaccination.

This morning, I was reading a blog post from a Law Professor from Wyoming University.  I found it through a WorkCompCentral article, but the article is behind a paywall. 

Picture of Workers Comp COVID-19 Vaccination s virus

Public Use Copyright – US NIH

WorkCompCentral still has a freebie daily newsletter.  I signed up for a paid subscription in 2014 (worth it).   

Mr./Dr. Michael Duff (smarter than me) said that the presumption of an injury might be removed if the injured employee refused a vaccination.  

The article started my brain up (after two Keurigs, ok three) with the thought that what happens to a regular return to work and workers’ comp injury return to work if the employee has not been vaccinated for COVID-19 (at least the first shot)? 

Illinois Says No Comp If No COVID-19 Vaccination – Wow

Referring back to Attorney Duff’s article – Illinois may enact a law that says this:

A workers’ compensation bill filed in the Illinois House on February 19 provides, “no compensation shall be awarded to a claimant for death or disability arising out of an exposure to COVID-19 if the employee has refused a vaccination.” 820 ILCS 305/7.5 new

If one reads further down the blog page, Arkansas was also in the midst of legislative wrangling on the same matter.  

My slightly twisted thinking then said – What happens if an injured worker is released to return to work and they are unvaccinated or have refused a Workers Comp COVID-19 vaccination?  

Workers Comp Return To Work Disputes Spike?

Let us talk about the treating physician or an Independent Medical Exam (IME) physician.  The word that is tantamount would be: 

Maximum Medical Improvement (MMI)

Please follow the link if you are not familiar with MMI.  One way to think of it is all the parties’ (employer, employee, claims adjuster, physician, and others) goal is and always will be a return to gainful employment.   

Surgeons Workers Comp COVID-19 Vaccinations treating physicians

Wikimedia Commons – SSgt. Derrick C. Goode, U.S. Air Force

If the injured worker does not receive or refuses a vaccination, does the treating physician say that he/she is at MMI?

That would be a big question that the persons in the above paratheses very likely will have to handle as the pandemic eases and normal return to work occurs in late 2021. 

Could the injured worker’s refusal of a vaccine that keeps them out of work cause them to lose their weekly benefits?  The disputes would sharply spike. 

Workers Comp COVID-19 Vaccinations and The Presumption Legislation

Research into this subject today points to none of the State’s multiple-presumption Senate/Assembly Bills and laws considered this conundrum.  

Letting the Workers’ Comp Judges and Appeals Courts settle this matter may not be the best avenue.  Watch for the states to address this issue soon (or maybe not). Illinois has broken the ice in an indirect manner. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: return to work Tagged With: above paratheses, gainful employment, slightly twisted, tantamount

Workers Comp Test Audits – Pain or Preventative Measure

February 24, 2021 By JL Risk Management Consultants Leave a Comment

Workers Comp Test Audits – What Are They – Necessary Evil? 

Not too long ago, I had thought that Workers Comp test audits were not necessary and could be viewed as an intrusion on employer insureds’ busy schedules.  

pic worker comp test audits tube blue purple

Public Use License – Wiki-Amitchell125

Over time, I have come to realize that workers comp test audits may not be appropriate for every situation.   Many situations have come up in the last few years that have changed my viewpoint to a point.  

After speaking with quite a few carrier and independent auditors, their opinions on test audits changed and shaped my view of them to the point where I consider them necessary in some situations and not a necessary evil.  

Sending out a person with a completely different title than a premium auditor and retitling the audit as something like a risk analysis still seems an unfair situation.  How can an insured trust their carrier and agent with this when a test premium auditor has a different title completely? 

Let us look at a few aspects of test audits including:

  • Definition and Types
  • Rules
  • What is covered
  • Length of time to accomplish 
  • Industries 
  • Why they can be a way to avoid sticker shock at the final premium audit
  • Maximum per year – opinion 

Workers Comp Test Audit Definition

The definition of a workers comp test audit is twofold:

  • State Funds of Workers Comp Test Audits are cash

    Wikimedia Commons – Jericho

    A premium audit during the early part of the policy year, usually with a new insured, often with State Funds or assigned risk policies.  The audit functions to establish the proper classification codes and payroll levels early in the policy year to avoid the sticker shock at the end of the policy term.

  • Each state may audit certain policies at random by requesting them directly from the carrier or by doing an in-person audit at employers (rare).  I am not referring to this type of test audit in this article.  These audits usually allow the Workers Compensation rating bureaus (NCCI, WCIRB) to affirm that the proper classification codes are being used for a certain type of employer or industry.

Workers Comp Policy Audit Rules 

Most policies read something like this on the premium audit rules – yes, it is in your policy.   I recommend your read your current policy:

We reserve the right to audit your worker’s compensation policies at a time and place convenient for your company.  We may perform an audit any time the policy is in effect and up to three years after the policy expiration (my quick summary).

What Is Covered In The Audit – Length of Time

The materials that are requested for review may be the same type of information requested at the final premium audit for the policy.   The review is usually shorter in time as your policy just started out with them.  One premium auditor commented at a conference that they like to “get in and get out quickly.”  Follow the previous link for a list of the materials that can be reviewed by the premium auditor. 

Type of Industries or Companies

Industries of Workers Comp Test Audits like factories

Wikimedia Commons – Mario Hains

The industries that I have seen test audited the most are:

  • Employment agencies
  • Trucking firms 
  • Construction companies 
  • Very large corporations
  • Companies in the assigned risk pool 
  • Any company that may have a large amount of premium base 

Workers Comp Test Audits = Avoiding Sticker Shock

One of the most devastating developments that may not have been budgeted by the business owner is a huge unexpected premium audit bill at policy expiration.   The workers comp test audits may help to avoid this situation by establishing the workers’ comp premium base at the beginning of the policy, especially in assigned risk pools. 

When is the best time to do a test audit?  From the numbers I have seen, 100 days into a policy would be the best time to perform test audits.   That way enough current documentation exists to establish many of the facets of the premium audits.

Maximum Number Per Policy Year

One of the caveats that I pondered as I wrote this article was how many times per year should a carrier be allowed to perform a workers comp test audit.   

Each policy is unto itself. I do not want to issue a blanket statement.  However, one test audit and the final premium audit should suffice for almost any employer that the carrier considers as a candidate for a test audit process.  

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Workers Comp Premium Audit Process Tagged With: get in and get out quickly, Length of time to accomplish, most devastating developments, not a necessary evil, retitling, viewpoint to a point

WCIRB 8871 Webinar – What California Insureds Need To Know

February 18, 2021 By JL Risk Management Consultants

California’s Rating Bureau WCIRB 8871 Webinar Today – Some New Insights 

I just finished watching the WCIRB 8871 webinar.   The webinar was only 30 minutes.  Then again, how long can a group talk about the new classification code?

Very few changes were introduced from the previous WCIRB 8871 webinar that you can find here.  

The Main Issues Learned Today – Important Ones 

WCIRB will begin with the same rate as 8810 until they have enough data to start with an 8871 rate.  Last year, two different premium auditors told me this was going to happen at the beginning. 

WCIRB 8871 Webinar Slide

(c) WCIRB – please click to see a larger image

Please click the thumbnail below to see the complete slide.  The WCIRB will use almost the same rules as NCCI’s 8871 Classification Code.

The most important part of the classification code is the amount of time worked in the office or at home.  If more than 50% of the employee’s time is in the office, the correct classification code is 8810.    

WCIRB 8871 Webinar Answered my Question 

I had sent in a question posed by one of our clients in Orange County, CA.   How about 8868 – the teacher’s classification code – are we going to see any of the teachers considered as 8871 employees?

The answer was what I had thought – 8868 Teachers, Professors, Instructors is an inclusive code.  So, any Standard Exceptions including 8871 (a standard exception code) would be considered 8868.  Online teachers are still 8868.  

NCCI – 8868 COLLEGE—PROFESSIONAL EMPLOYEES & CLERICAL – cross-referenced as School—Professional Employees & Clerical

WCIRB – Classification 8868, Colleges or Schools – private – not automobile schools – professors, teachers or academic professional employees, was amended to clarify its intended application and provide direction as to how related operations should be classified.   

COLLEGES OR SCHOOLS – private – not automobile schools – professors, teachers or academic professional employees

8868
Academic professional employees consist of but are not limited to, deans, chancellors, vice-chancellors, directors, principals, assistant principals, presidents, vice presidents, librarians, registrars, curriculum developers, psychologists, speech therapists, and counselors. The responsibilities of such employees typically include planning, directing, administering, counseling, or curriculum development.

This classification also applies to teachers’ aides, tutors, athletic team coaches, or library employees. This classification also applies to Independent Living Skills (ILS) instructional programs that are administered through state-contracted Regional Centers.

The above represents just the basic classification code rules for 8868, I did not include the alternate definitions of 8868 that would be under alternate class codes. 

Telecommuters Are Part Of Your Company – even if not in CA

The reason that I have covered Telecommuters so much is that unless your company is in one of a few states that do not have 8871 as a classification – you are going to deal with this code for what could be a long period of time.   

Many companies have now said (Microsoft(c), etc.) that employees will be working from home for a very extended period. 

The presentation from today should be available by Friday. I will post a link to the webinar next week.  I recommend watching the recording of the WCIRB 8871 webinar even if you do not have a business in CA. 

 

Filed Under: classification code Tagged With: Orange County, PROFESSIONAL EMPLOYEES & CLERICAL, speech therapists, teachers, thumbnai

Workers Comp Website – 10 Things To Know When Switching Providers

February 18, 2021 By JL Risk Management Consultants

Workers Comp Website – 10 Lessons Learned Since Last Week’s Switch

J&L moved its workers comp website provider last week.  Many problems came up that need to be shared so that our article and newsletter readers will not have or be prepared for the same type of problems. 

Our last workers comp website became slower and slower as we added graphics and SEO information into the articles.  We took the plunge last week.   Next up are the 10 problems to prepare for during the switch.   The switch looked so easy.  It was not as easy as advertised. 

pic Workers Comp Website nuclear blast

Public Use License – US National Archives

Switching a workers comp website (or any other type) –

The lessons learned were:

  1.  Having an IT background does not matter – I have an intensive background, but not in new programming languages or website structures.  I tried to import the website manually and boom and use importer software (see picture) that is what our website looked like.  
  2. Pay for someone to do the switch at the new provider – an extension of my #1.  After spending a whole Saturday freaking out as my IT background did not save the day.  It was the best $30 J&L spent.
  3. It takes a week for the website to completely switch over – save your old website and emails for awhile.  I switched back three times to my old website provider over the last three years as the grass was not greener in the new pasture.  Most hosting services let you try out their website for 30 days.  I switched back last time after 28 days.
  4. Delete (be careful) your old website on the old provider after you are sure the new provider worked for you and your company.  Google HATES duplicate content – they will consider your new content as a copyright violation.  Yes, they will do that very quickly.   A website can be unranked very quickly by Google. 
  5. Do it over a weekend as you will probably lose a few emails.  I bcc:’ed all my outgoing emails back to another company email address to make sure the outgoing mail server was working.  
  6. Find a good provider – not the cheapest – check the ratings
  7. Be extremely patient – a huge key to success, the Cutcompcosts website switch. 
  8. Speed is now key in the Google ranking – UX is the new term for getting ranked. Google now measures how the website functioned for your visitors.  Phone UX will become the new setting checked more by Google.   
  9. Understand the difference between WordPress.com and WordPress.org.   The second one is more of a freelance type of hosting service and web provider.  The first one- WordPress.com websites can be very hard to move to another provider. 
  10. Do not forget the visitors and users of your workers comp website.   If you keep them in mind, your website will show it.  Google now pushes user experience as the #1 consideration (makes sense).
  11.  Bonus – The web is the new home of many shysters.  One of the most recommended website providers in some articles is the one we just moved away from due to slowness and bad customer service.  Check out this in-depth review of providers by type.  Remember that cheap is not best. 
  12. Bonus-Do not forget about phone and tablet access.  Almost 1/3 of our visitors come from a phone.  Your nice big website may need to be repurposed for the phone.   

Filed Under: Cutcompcosts Tagged With: graphics, hosting service, intensive background, Phone UX, whole Saturday freaking out

Workers Comp Zoom Presentation – Top Four Hard Lessons Learned

February 11, 2021 By JL Risk Management Consultants

Workers Comp Zoom Presentation From Last Week – Lessons Learned 

My Workers Comp Zoom presentation for the Academy of Insurance last week taught me a few lessons that came from doing a remote presentation.  I had used Microsoft Meetings and Zoom for meetings which had always gone well, or at least I had thought they were satisfactory.  

As text underlines were used in the article, any outgoing links will be in crimson. 

pic of Microsoft Camera Workers Comp Zoom Presentation uses

Public Use License – Microsoft

You can check out the aftershow of the presentation here.  If you want more on Workers’ Comp info – Frank Pennachio is providing a presentation today on Hidden Concerns with Workers Comp Rates.  

Workers Comp Zoom Presentation Lessons 

Lesson 1 – Do not use your laptop’s microphone. 

The microphone did not accurately reflect that I had a very deep voice.  I have a Microsoft Lifestyle 3000 microphone that I should have used even if it is a rather old one.  I had used it before in presentations.  You can see a picture of the camera/microphone over on the right side.

I think a headset would have caused a distraction.  I went with the laptop’s microphone.   The laptop microphone performed well, but not to my satisfaction. 

Lesson 2- Check out your system again before the presentation starts

This lesson was covered in an article I wrote concerning a bad web presentation I attended late last year.  I should have listened to my own advice.   

Well, I did check out the Zoom platform a few days before to make sure my laptop’s microphone and speakers were working well. 

When Patrick (a good guy to work with) at the Academy ran me through a sound and video check 20 minutes before the starting time, my laptop had a fit.  Why?   I had installed eSet web security earlier in the week. 

I did not have eSet(c) prepared for doing a Workers Comp Zoom video presentation.   eSet provides a great web security solution – this time it was working too well.  Luckily,  I had a heavy tech background and did a workaround on the fly – whew! 

Lesson 3 – If you are going to plug directly into the wireless router, check to make sure you have a good cable – CAT5 or USB  

An hour before the presentation, I decided to be safe that I would plug directly into the router.  Check out my recommendations from last year for attending webinars. 

Once again, the laptop and the wireless router had a fit – nothing would work, so my laptop would turn back on the wireless connection that I was trying to avoid and eSet was also worrying about a direct connection. 

The answer was a simple bad cable that is now in the local recycling center.  

Lesson 4 – Remove or move away from distracting paintings or pictures in the background

When I was hooking up the CAT5 cable directly into the back of the wireless router, I moved very near to the router.  I ran a camera test to make sure everything was working well.   

I realized I had a very distracting painting behind me – think Picasso – that I had to quickly remove.  

Have we not all seen the Zoom presentation where the presenter decided that a painting would be a good background and then we end up paying more attention to the painting?  

Presentation Disaster Avoided 

The bottom line was the presentation went off without any problems and was a great experience.   If I had waited to minutes before testing everything the results might have turned out more negatively. 

 

Filed Under: Workers Comp Presentation Tagged With: camera/microphone, eSet web security, Frank Pennachio, Microsoft Meetings, Zoom for meetings

Experience Mod Increases While Loss Runs Show No Changes – WTR?

February 10, 2021 By JL Risk Management Consultants

Upset Reader Says Experience Mod Increases – Loss Run Had No Changes  

One noticeable complaint tread from our article and newsletter readers recently comes from Experience Mod increases while their company’s loss runs show no changes.  

chart of experience mod increases over time

Wikimedia Public Use License – Hellisp

Many of them have become clients to have J&L examine their loss runs compared to the Experience Mod increases. 

By the way, WTR is a clean replacement for WTF.  It is What’s The Reserve?

Two Quick Definitions

Experience Modification Factor – (E-Mod or EMR or X-Mod) – the rating bureaus (WCIRB – California, and NCCI – 40 states) compare your company’s Actual Losses with businesses similar to yours (Expected Losses).   

Loss Runs – your company’s insurance carrier provides a listing of your claims that you have had while insured by that carrier.  

Why your Experience Mod Increases With The Same Total Losses

Your losses on your loss run are usually broken up into three categories each having paid, reserved, and total incurred figures. 

  1. Indemnity – benefits paid directly to the injured employee such as weekly Temporary Total, etc.
  2. Medical – paid to medical providers for treatment 
  3. Expenses – paid by the carrier to adjust the files  

One of the main concepts to remember is the Expenses figure.   Unless your company has a special agreement such as with Large Deductible policies #3 above is not responsible for Experience Mod increases.   Why? 

Because Expense figures never show up on Experience Modification sheets that contain the Total Incurred figure the carrier reports to the rating bureaus.   

Expenses are: (Also known as allocated expenses or ALAE)

  • Attorney fees to defend the file 
  • Private investigator fees 
  • Rehabilitation nurse fees – (debatable) 
  • Any fees the carrier pay for adjusting the file

Under the Radar Experience Mod Increases

One thing should be said now – I have not seen except in a few instances where the claims adjusters have intentionally increased the reserves to affect the Experience Mod.  

Let us look at how an Experience Mod increases without any changes to the loss run totals.

Workers Comp File #09123ABN – no cents or dollar signs for readability.  The $182,000 is reported to the rating bureaus for figure your Experience Mod. 

File #09123ABNPaid Reserves Total Incurred 
Indemnity55,00025,00080,000
Medical100,0002,000102,000
Expense 23,50028,00051,500
Total178,50055,000233,500

The adjuster negotiates a settlement with the claimant’s attorney for $53,000.  Instead of having to go through multiple levels of approval, the claims adjuster decides to shift the Expense reserves for 28,000 to cover the settlement check.  

File #09123ABNPaid Reserves Total Incurred 
Indemnity55,00053,000108,000
Medical100,0002,000102,000
Expense 23,500023,500
Total178,50055,000233,500

The carrier would now report $210,000 to the rating bureau, not the $182,00 as in the first table.   Wow, so the Total Incurred reported to the rating bureau just increased by 15.4% on this one file.  Yes, that would affect the Mod under most circumstances. 

Avoiding Experience Mod Increase Confusion

This comparison means that your loss run review should examine the Total Incurred for the medical and indemnity totals when compared to the loss runs. 

Why am I bringing this up now?  Today, I reviewed two loss runs where this happened on multiple claims. 

No, the claims adjuster really did nothing wrong by shifting the reserves unless it violated an internal rule.  Make sure that you separate out the Expense figures to make the  Experience Mod increases make sense.    

Filed Under: E-Mod X-Mod Tagged With: cents or dollar signs, claimant's attorney, Indemnity, Private investigator fees, shifting

Workers Comp Allocated Expenses – Who Pays For Which Bills?

February 5, 2021 By JL Risk Management Consultants

Workers Comp Allocated Expenses – The Hidden Premium Charges You May Not Owe 

A long-running debate still exists today on how workers comp allocated expenses are charged to employers’ accounts.  Let us cover the: 

  • Definition of the expenses
  • Process of charging the allocated expenses to the employer’s Experience Mod
  • Sources of payment confusion
  • Specialized programs for large deductible policies
  • New important finding – reserve shifting 
  • Which workers comp bills that mistakenly end up paid as medical charges 
  • How to audit workers comp allocated expenses on loss runs 
pic hidden lighthouse workers comp allocated expenses

(c) Wikimedia Public – psyberartist

 

Workers Comp Allocated Expenses Definition

The definition of allocated expenses is:

(also known as ALAE) are expenses charged to a Workers Comp term file that are not indemnity or medical benefits. They are associated with the adjusting of the file. Expenses for defending claims such as attorney fees, private investigators, independent medical exams, and many others are considered as Allocated.

Process of Charging Allocated Expenses To Employer’s Mod

The expenses for a file such as attorneys, private investigators, and rehabilitation nurses are usually paid by the worker’s comp carrier.  The charges usually appear under the Expenses column in a loss run.   The other two types of payments appear under Indemnity and Medical.  

Sources of Payment Confusion

When a new or inexperienced payment processor comes across a bill,  they are left to choose which one of the three payment types to add the payment to when cutting a check.  Some payment systems will not allow a medical bill to be paid under the indemnity.   Very few systems prevent a payment that should be under the workers comp allocated expenses from going under medical.  

If payment is paid under medical, how is that caught by the system? 

When the bill payment is issued becomes critical to make sure the bill is charged to the employer or the insurance carrier.

Reserve Shifting 

Reserve shifting occurs when a claims adjuster does not have enough funds to pay a certain benefit,  Instead of increasing the reserve category (medical, indemnity, or expenses),  reserves are moved from one reserve category to another. 

The reserve shifting makes sense when one looks at a workers’ comp file.   The one drawback is when monies are moved from the workers comp allocated expenses reserve to indemnity or medical.  

The insured Experience Mod, in essence, just incurred a reserve increase without the total file reserves being increased.  The indemnity or medical reserve increase from the reserve shifting will cause a file that seems to be the same reserve size to have gotten much larger.

J&L sees this occurring more often each year.  I have one now on my screen that I am reviewing for an agency in California where this very situation occurred very recently.   The amount of $43,500 was moved from allocated expenses to medical. 

This shift may seem like a harmless adjustment of the reserves, but the employer experienced a $43,500 bump to the amounts that count into their Experience Mod. 

Yes, if the adjuster just raised the file $43,500 it would have had the same effect, but this would have increased the total amount of the file which would make the increase in reserves and eventually the Mod more obvious.  

Workers Comp Bill – Medical or Allocated Expense?

The bills that usually end up mistakenly input into the medical payments are Rehabilitation Nurses.  This happens frequently.  Rehabilitation nurse bills should routinely be paid under the Allocated Expense category, not medical. 

Independent medical exams are a grey area.  The bills are medical appointments but are they not essentially adjustment expenses on the file and not true medical treatment. 

The debate still yet occurs on these two types of bills yet even today.

When I have attended the NCCI data conferences in West Palm Beach, the determination was made that allocated expenses were s any type of funds that were not incurred to assist the injured employee medically.  

Auditing Workers Comp Allocated Expenses on Loss Runs 

Reviewing workers comp payments without direct online access is next to impossible.   Obtaining online access can save time and headaches when reviewing files.

The best way to review these payments is to look at each payment to see what reserve type it was paid under for each check.  This can be confusing at times.  

Some carriers may have a backstop in their systems that will not allow, for example, a certain law firm to have a check issued from the medical reserves.   Most do not.  

Following the claims monthly for reserving, payment, and handling usually results in the best outcome.  

Please note that I have never seen an insurance carrier purposely pay workers comp allocated expenses under medical or indemnity reserves. 

Filed Under: ALAE Tagged With: allocated, determination, monies are moved, pay a certain benefit, routinely be paid

Workers Compensation Presentations Kawasaki Technique

February 4, 2021 By JL Risk Management Consultants

Workers Compensation Presentations And The Kawasaki Technique 

The basis for my current Workers Compensation presentations currently comes from a great book that I read when starting J&L Risk Management Consultants. 

pic of Kawasaki book workers compensation presentations

(c) Guy Kawasaki – all rights reserved

The Kawaski presentation technique comes from the great book by Guy Kawasaki – The Art of The Start 2.0.   If you are a budding entrepreneur or thinking about starting up a side business – this is the first book to read from front to back.  

I coined the term, Kawasaki Technique, after reading his great recommendations on how to do presentations when we could all meet in person. 

I am doing a workers compensation presentation online with the Academy of Insurance today.   The technique will be on full display on the webinar.  

Works For Any Online Workers Comp Presentations

The three main presentation concepts I found in his books are: (works in webinars) – avoids Death by PowerPoint(c). 

  1. Find out or estimate the oldest person that will be viewing your workers compensation presentation – Divide that person’s age by two.  That becomes your smallest font size.  I have had many presentation attendees thank me for the large typeset.   This recommendation works like a charm. 
  2. No one wants to look at a page of text in a presentation as we remember pictures – think a picture paints a thousand words.  Use pictures – this will keep the reader engaged.  The pictures will give the presenter visual cues without just reading the text – how many of us have seen recent webinars where the person just reads the text (Ugh!).  This was even worse in person.  Our attention spans are down to six seconds now from 20 minutes. 
  3.   End early – (20 to 30 minutes) harder to do with webinars – people appreciate the extra break time and will thank you with future business – trust me.   How many people can you remember at the old in-person presentation that run outside with their phone immediately after a presentation?
  4. Leave time for questions – immediate feedback on your webinar or presentation. 
  5. Please, please do not run overtime.  I still have a presenter stuck in my head from 2019 that went over 30 minutes.  I wanted to use the services that the company offered – after that overtime display – I moved on to another company.  In the last seminar where I was on the dais, the prior speaker left me 30 minutes out of an hour presentation.  
  6. My own recommendation – be highly presentable at any Zoom, Microsoft Meetings, or Skype meeting.  Professional appearance wins the day.   You have 3 seconds to make a favorable impression.
  7. Google Zoom meeting advice – there are hundreds of great articles on how to prepare and present.  
  8. Check out my two articles on recommendations on how to have a good video connection. I used my IT background to write them. 

Mini guide for workers comp webinars

Other ideas to speed up webinars

Guy Kawasaki’s book recommended one great thing that made my business start rolling in the early 2000’s – Quit planning, get off your *&^%$% and do something.  That was the best advice from the book for me.   

I hope this mini-guide makes your workers compensation presentations the best possible meetings. 

Filed Under: Workers Comp Presentation Tagged With: book, Kawasaki Technique, Skype meeting, visual cues, webinar or presentation

8871 Standard Exception Classification Code Question

January 28, 2021 By JL Risk Management Consultants

Reader Question on 8871 Standard Exception Classification Code Article

Last week, I wrote an article on the   2021 USRP Manual Update by the California Rating Bureau (WCIRB).   The webinar was great.   One area that was covered well was the 8871 Standard Exception Code.

A devour reader reminded me that 8871 is a Standard Exception Code and I did not address.   I changed the old saying from the “customer is always right” to the “reader is always right.”

Screenshot of 8871 Standard Exception Code

You are correct.  I did not cover the 8871 Standard Exception part well enough.  I took a great screenshot of Brian Gray presenting (nice job) that part of the discussion.  

I planned to include it this week.  The screenshot should have been included last week.  I apologize for that miscalculation – no pun intended.  

Yes, this is a CA webinar.   A majority of the states use the same code.  8871 covers the complete US except for 11 states. 

Why do I address this code multiple times?  A large number of employees had and still now have to work out of their homes.   

The webinar screenshot contains a great summary definition: (please click to see larger picture (thanks)

screenshot 8817 Standard Exception WCIRB Webinar

(c) WCIRB – please click to see larger version

If you cannot see the screenshot when you click on it, this is what the slide covers:

Standard Exception Restrictions

02 2021 USRP Classification Changes32Classification 8871 will be a Standard Exception classification, subject to USRP Section III, Rule 4, Standard Exceptions.

If a classification specifically includes Clerical Office Employees or Clerical Telecommuter Employees, such employees shall be assigned to the standard classification, regardless of whether the work is conducted at the same or at a separate location.- 41 classifications that specifically include Clerical Office Employees will be amended to also include Clerical Telecommuter Employees.

Woman working 8871 Standard Exception on her laptop

Wikimedia Commons – Brian Kerrigan

Not permissible to divide a single employee’s payroll between a Standard Exception classification and any other classification, including another Standard Exception classification, with the exception of a single permanent job reassignment.- Clerical Office Employees will not separately classify their work-at-home days; 8871 applies only to Clerical Office Employees who work more than 50% of their time at their home or other office space away from any location of their employer.

The  slides for the webinar can be found here – including the 8871 Standard Exception slides.

 

©J&L Risk Management Inc Copyright Notice             

Filed Under: Standard Exception Codes Tagged With: 8871 covers, reader is always right, separate location, webinar screenshot

J&L Founder James J Moore to Teach Insurance Academy Course Feb 4th

January 28, 2021 By JL Risk Management Consultants

J&L Founder James J Moore Instructor For Academy of Insurance Course 02/04/21

J&L founder James J Moore will teach a one-hour course on February 4th.  The one-hour course will cover occupational disease rules in the age of COVID-19.J&L Founder James J Moore AIC MBA ChFC ARM

According to James -” COVID-19 remains a terrible disease that affects many parts of the workers’ compensation process.   Some states have seen fit to pass multiple COVID-19 presumption rules that may “already be on the books” from the early to mid-1900’s.”

COURSE OUTLINE

Sign up here if you wish to attend the webinar.

The course will cover many of the articles written in this website.  Follow the article links to find out more.

Occupational disease remains one of the unknowns in Workers’ Compensation insurance claims even with the advent of COVID-19.   Are the presumption laws needed to make sure the workers injured by COVID-19 receive proper care and benefits?

Occupational disease claims can be the costliest.  Mesothelioma occupational disease claims may cost $100,000+ per incident.

In this session you will learn:

  • Alvin Toffler’s COVID-19 prediction comes true 30 years later
  • When did Workers’ Compensation begin – hint – it is not the 1900’s
  • How World War II and wristwatch faces became the origin of Occupational Disease laws nationwide
  • Who are the Radium Girls and what were the uses of radium?
  • The difference between an accident and an occupational disease
  • Examples of Occupational Disease laws and rules in certain states
  • How long does the injured employee have to make a claim – unknown part of rule that causes problems
  • Are the COVID-19 presumptions necessary?

    Mesothelioma J&L Founder James J Moore occupational disease

    Wikimedia Commons – Robertolyra

  • Occupational disease vs. personal sensitivity claims
  • Can a COVID-19 claim be denied?

J&L founder James J Moore will take any questions that you have after the presentation and will give examples from his long history claims handling career including sources of more information.  You may contact him after the course with any questions at his email address [email protected]

 

©J&L Risk Management Inc Copyright Notice

Filed Under: James J Moore Tagged With: Occupational Disease laws, one-hour course, presumption laws, wristwatch faces

Workers Comp Claims Adjusting ASAP – It’s Over in 48 Hours

January 21, 2021 By JL Risk Management Consultants

Workers Comp Claims Adjusting – Do It Now on New Claims

The Workers Comp claims adjusting for new claims is over in 48 hours.  I know – sounds like a bold statement.  The old paradigm used to be 24 hours.   I am giving the adjusters a break.   

Many of my webinars and presentations on handling claims by employers and the claims staff always come with a warning.   As Roy Orbison sang – It’s over.  

roy orbison pic workers comp claims adjusting over 48

Wiki Public Use – Ronzoni

Check out this article on the 48-hour timeclock.   Most of the links in this article were written at least 12 years ago. 

New Claim Over in 48 Hours – A Timeline

My Six Keys to Saving on Workers Comp follows the same timeline.   The steps are:

  1. The employee has an accident.  For employers – are injury reporting procedures in place?  If not, an expensive delay has already occurred – the adjuster has not seen the claim yet. 
  2. The employee reports the accident.  Does the employer have procedures for reporting an accident?
  3. The claim is filed.  The injured employee seeks out medical treatment.   The workers comp claims adjusting process has not started yet.  Medical control of the file has already been established by the employer and employee.
  4. The adjuster receives the claim.  They contact the employer, treating physician, and injured employee – if the claims staff performs the critical three-point contact.   
  5. In #4, the first report of injury may be on the adjuster’s screen after the 48-hour time frame.   That is why ASAP remains the best way to obtain and keep control of the claim throughout the process. 

The injured employee has reported the claim, sought medical treatment, and may be off work by the time the first report of injury is received by the claims adjuster. 

Workers Comp Claims Adjusting vs. First Impressions

Man treating Workers Comp Claims Adjusting an injured person's leg

Wikimedia commons – Public domain

The employee has already interacted with their employer in reporting the claim.  The claims clock ticks away. 

The important part  – the injured employee has already judged the workers’ comp process first-hand.  They have already developed a positive or negative attitude by going through the process.   

The claim is 48 hours old.   Every part of the workers comp claims adjusting process will not really change the claim.  First impressions count.    

Over the years, I realized why my first claims manager would go ballistic if the three-point contact was not made within 24 hours even if the claim came in on a Friday afternoon. 

One saving grace comes from the WCRI (Workers Comp Research Institute) with the studies by Dr. Savych.  The one component when looking back on their claim after the resolution was the trust of the employer by the employee. 

 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: claims adjuster, claims department Tagged With: 48-hour timeclock, bold statement, critical three-point contact., negative attitude, obtain and keep control

WCIRB USRP Manual Update Webinar – Yes, It Matters To You

January 21, 2021 By JL Risk Management Consultants

California’s WCIRB USRP Manual Update – From The Webinar

The workers’ compensation rating bureau for California hosted a very thorough webinar on the WCIRB USRP Manual update yesterday.   Wow, sounds boring?  Then your company must have extra money to spend even if you are not located in California. 

picture of wcirb usrp manual update beach

Public Use License – Margaritaprounia

Last year, I attended this meeting in Oakland, CA.  I had thought it was going to be at least a half-day conference.  The networking and updates were still worth the trip.   I took the BART to see a San Francisco-based client. 

What is the WCIRB USRP Manual – Glad You Asked

The California Workers Compensation Rating Bureau at least yearly updates the WCIRB USRP Manual.    A few definitions are needed –

  • WCIRB – the acronym for the Workers’ Compensation Insurance Rating Bureau in Oakland CA.  The organization provides all the rating information for California exclusively.
  • USRP – Uniform Statistical Rating Plan – Think of it as the Classification Code manual + many other rules

Two updates directly from the manual – the manual is a 300+ page PDF. 

Antic WCIRB USRP Manual Update Wall Clock

Wikimedia Commons – Sally V

Classification 8810, Clerical Office Employees, was amended too direct that Clerical Office Employees who work more than 50% of their time at their home or other office space away from any location of their employer are classified as 8871, Clerical Telecommuter Employees.

Classification 8871, Clerical Telecommuter Employees – N.O.C., was established as a Standard Exception classification applicable to Clerical Office Employees who work more than 50% of their time at their home or other office space away from any location of their employer.

These two classifications were included as I think that it will impact the most workers.   The webinar pointed out that 50% of the time the employee must be working from their in-home office or non-employer provided remote office space. 

Classification Code 8871 is already in use in most of the nation.  That is why I always say to not ignore any California updates even if your company does not operate in the Golden State. 

The WCIRB even included a cheat sheet for reference on the new changes to all the manuals.   

Why Does the Update Concern Me?

Class Code 8871 has been around for quite some time.  I find that sometimes the WCIRB definition of a term may help me better understand the NCCI and other rating bureau’s info. 

To be consistent, let us look at 8871 for NCCI and the WCIRB.  I do this often – compare their definitions. 

WCIRB –

Classification 8871, Clerical Telecommuter Employees, shall be applied only to the payroll of persons
herein described who work more than 50% of their time at their home or other office space away from
any location of their employer, and devote the balance of their time to clerical office or drafting duties
at any of their employer’s locations in areas that are separated from all other work places of the employer by buildings, floors, partitions, railings or counters and within which no work is performed other
than clerical office or drafting duties as defined in this Rule.

NCCI –

rifle scope WCIRB USRP Manual Update in the ice forest

Wikimedia Commons – Captaindan

SCOPE  Code 8871 is applied to qualified clerical telecommuter employees. To qualify for Code 8871, an employee must perform clerical duties in a residence office and meet other conditions described below.

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. In the event an employer operates a business from a residence and the employer has clerical staff at the employer’s business location residence, these clerical employees are classified to Code 8810.

Clerical duties of an employee classified to Code 8871 include but are not limited to 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. Code 8871 is not applicable to telecommuting employees who engage in outside sales; any work which exposes the telecommuting employee to the operative hazards of the business; and any work, such as a stock or tally clerk, which is necessary, incidental, or related to any operations of the business and takes place in an area other than a residential clerical office.

Telecommuter employees are common to many businesses and are therefore considered to be Standard Exceptions unless they are specifically included within the phraseology of a basic classification.

————————————————————————————————————

Residential WCIRB USRP Manual Update office

Wikimedia Commons – Axel Bleyer

Now, before the premium auditors reading this say – Hey, how about the basic manuals?  Yes, you are correct, I am only pulling from the USRP and the Scopes manuals for readability and brevity.  

The answer to the heading is your California or non-CA business may now have telecommuting employees due to the COVID-19 pandemic.  It is much better to separate out your Class Code 8871 employees now than have the employees moved into the classification at premium audit. 

The WCIRB USRP Manual update webinar was worth the time spent.  I will add a  link to the video when the WCIRB adds it to their website on January 22nd. 

 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: WCIRB Tagged With: half-day conference, office space, railings or counters, Standard Exceptions, Uniform Statistical Rating Plan

Workers Comp COVID-19 Vaccination Claims – Adjusters Confused

January 14, 2021 By JL Risk Management Consultants

Workers Comp COVID-19 Vaccination Claims – Who’s on First?

Today, I decided to check on how Workers Comp COVID-19 vaccination claims are being handled by claims adjusters. Most of the adjusters had some sort of handle on how to investigate and adjust claims that involved COIVI-19.

picture of workers comp COVID-19 vaccination claims

Public Use License – Maximilian Schönherr


The states have now decided to pile on more legislation on approving/denying claims that involve COVID-19 vaccinations. Whew!, the worker’s comp claims adjusters’ job could not be more complicated with the new rules and with states that have new “emergency rules” in process.

Yesterday, I wrote an article on how more complicated the job of the worker’s comp premium auditors became with the pandemic. Check it out at the link.

Three Adjusters’ Comments on COVID-19 Vaccination Claims

Where did I make the confused claims adjuster assumption?   I called up three adjusters and asked them.  As with yesterday’s article on premium auditors, I have provided anonymity.   The three adjusters are monoline (workers comp only), multistate adjusters.  

They all three were working out of their home offices.  I called them after 5 PM as to not disturb their normal work hours.  Their comments were (summarized): 

  1. One state that I handle just had new vaccination claim rules, and the other two are still in process.  I knew how to adjuster any COVID-19 claims – now the states are coming up with these new sets of rules that are conflicting.  I am waiting on my carrier to send out a memo on how to handle the vaccination claims.  I hope that email arrives very soon. 
  2. If it is a requirement of the workers’ job, my Third Party Administrator has said that we should pay the claims as if it was an on-the-job injury.  If their job did not require the vaccination, that is a grey area.  Most people are working from home now, so why would the vaccine be required unless their company requires it to return to an office environment?  I am a little confused but will handle them on a case-by-case basis.  I hope my TPA provides more direction on these claims soon. 
  3. We are denying them unless they are frontline health workers or have a written requirement by their employer to have the vaccination to continue working.  Two of the states I handle have said they are compensable
    Frontliners of COVID-19 Vaccination Claims wearing PPE

    Wikimedia Commons – Javed Anees

    regardless.  I have seen a few articles that have conflicting opinions. 

The most common comment was that the states are changing or may alter the rules on COVID-19 vaccination workers comp claims.  The three adjusters were not expecting a high number of vaccination reaction claims.

Checking Out The Articles on COVID19 Vaccination Claims

I listened to a Corvel webinar last week on COVID-19.  One of the presenters had said the same thing as adjuster #2 – it needs to be handled on a case-by-case basis.  

An article by the venerable WorkCompCentral – (behind a paywall) – by Mike Fish had an interesting take on the situation from the Alabama Attorney General’s office.   The AG said that if the vaccination was required by an employer, the State of Alabama would likely say this is a covered event under the Workers’ Compensation statutes.  

Update – Mike FishAttorney for Fish, Nelson, and Holden said sent me a nice note in the comments that referred me to the free article (not behind a paywall).  The article can be found at this link.  

http://www.alabamaworkerscompblawg.com/blawg-post/alabama-attorney-general-says-vaccination-side-effects-are-covered-by-workers-compensation

What Do The Rating Bureaus Say – NCCI Has A Huge Reference Guide

Attorneys says COVID-19 Vaccination Claims has side effects

Wikimedia Commons – The United States Department of Justice

I checked out this page to see if there was any information on COVID-19 vaccination claims.  I could not find any current legislation that had already been enacted on vaccination claims.   It could be that the legislation is still in progress or that it was contained in the prior COVID-19 legislation. 

There was nothing on the WCIRB website.  While I was finishing up the article, WCRI sent over a press release on the early effects of COVID-19 claims.  You can check out the study that covered COVID-19 claims in 27 states here. 

Compensable Workers Comp COVID-19 Vaccination Claim?

This nurse passed out and then disappeared from the hospital where she worked in Tennessee.  I felt bad for her.  Would this be a compensable claim?   

The bottom line is the worker’s comp adjusters and premium auditors’ job may have been made much more complicated by enacting rules that were actually already covered by worker’s comp occupational disease rules.

 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: workers comp claim Tagged With: anonymity, case-by-case basis, Mike Fish, monoline, new vaccination, nurse passed out

Workers Comp Premium Auditor’s Job Now More Difficult

January 14, 2021 By JL Risk Management Consultants

Workers Comp Premium Auditor’s Job Now Much More Complex 

One of the results of the COVID-19 pandemic is the effect on the workers comp premium auditor’s job.  The complexities of auditing workers comp policies become more pronounced with multi-state employers.    

picture of frustrated workers comp auditor's job

Wikimedia Public Use – LaurMG.

I first realized the results with an article published by Mark Walls of Safety National.  Having a non-premium auditor individual write an article on the workers comp premium auditor’s job was an eye-opener. 

Mark Walls’s Article From Last Week

You can find Mark Walls’s article here on ITL.  The article was summarized as:

“Controversy relating to workers’ comp premium audits existed long before COVID. However, the pandemic made things much worse.  Many states issued emergency rules requiring immediate premium audits with the thought that this would bring premium relief to troubled businesses. However, these rules mostly created confusion and added high administrative costs to both businesses and carriers. No one was prepared for the massive data collection and analysis effort that the states mandated.”  

My Workers Comp Premium Auditor Job and Emergency Rules 

After reading Mark’s great article on WorkCompCentral, the puzzle pieces came together. 

A puzzle pieces of workers comp premium auditor's job will come together

Wikimedia Commons – CrazyPhunk

Three different carriers contacted J&L Risk Management Consultants in late March/early April to consult on how to follow and comply with the changes in the premium audit rules in various states.  As I am a nationwide consultant, the carriers wanted me to write up reports very quickly on how to comply with the emergency changes and to process refunds to the insureds.

Even more complex than the workers comp premium auditor job was the agents handling the multiple changes to the new emergency cancellation rules for non-payment of premium.   Those changes made my head spin.  

The Workers Comp premium auditor job that I was assigned by the three carriers became frustrating very quickly.  The states changed the rules sometimes weekly by altering the last set of notices published with another set of rules.  

By the time I had written the reports for the three carriers, they resembled the old saltine crackers in the back of the pantry.  My reports were stale even after changing them a few times as I wrote the original drafts.  

Rating Bureaus Made Workers Comp Premium Auditors’ Job Almost Impossible

The states were making quick changes to their Workers Comp rating rules.  The rating bureaus such as NCCI and the WCIRB tried to keep up with the changes.   If the premium auditors were using the rating bureau rules, the rules may have changed by the time the prior rule changes were published by the bureaus.  

Even the definition of furloughed workers varied over time.   No blame should be placed directly on the rating bureaus.  They did the best that they could with what they had in front of them. 

Some State And Rating Bureau Rules Had A Delayed Effect 

Furloughed workers comp premium auditor's job rally

Wikimedia Commons – AFGE

Most workers comp insurance rating systems run 18 months behind to give the chance for claims development to occur on each workers compensation file.   

Check out my article on the delay here.  Yes, it is part of the workers comp framework.

As I covered in the article, many unknowledgeable workers comp pundits wanted to know the results of the pandemic immediately on workers comp.  The system remains a delayed system that will not change – pandemic or not. 

Interviews With Premium Auditors Today

My due diligence when talking about premium audit effects would be lacking if I did not interview a few premium auditors to get their take on what has occurred since March 2020.    All three asked that I kept their names and companies anonymous.   The main comments were:

  • I only do premium audits for one state.  My business has been slow lately.  I will need to check the rules as I have a multi-state client audit coming up soon. (employer auditor)
  • I am doing the best that I can do.  My company issues different directives on how to proceed with premium audits for certain states.  I follow those directives closely.  Many times,  I received updated directives in the middle of a premium audit that caused me to start the premium audit over – very frustrating.  (independent auditor for employers and carriers).
  • I have software that my company provided me with the supposed new changes.  I know they are partially outdated, but it is the software I must use.  I receive updates at least monthly.  (independent auditor)
  • The two very active auditors said the largest amount of confusion came when the departments of insurance ordered immediate refunds that defied the premium audit process framework.  The refunds could have been rectified at the time of the audit.  

As we can see in the three auditor’s comments, there exists an air of uncertainty.   Uncertainty in any model causes more uncertainty as one progresses through that model – even the premium audit model.

Negative Effect on Employers

Multi-state clients workers comp premium auditor's job receives negative effects on employees

Wikimedia Commons – Harry Furniss

The workers comp premium auditor’s job was not the only one affected by the emergency rules.  As Mark Walls pointed out in his article, not only were the insurance carriers under “emergency timeframes”, so were the affected employers.   The quick and dirty emergency refund rules caused many complications with employers including:

  • Immediate up-to-the-minute accounting for furloughed workers 
  • The same immediate accounting for home workers
  • Immediate preparation of records for the worker’s comp premium audit. 
  • Accounting for the refunds into the worker’s comp budgets. 
  • Even more accounting confusion when the final policy premium audit was performed 

The workers comp premium auditor’s job and the employer’s bookkeeping/accounting departments incurred a mound of new paperwork almost overnight.   Now that we have been through one emergency, did we learn any lessons for the next time?

 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Premium Auditor Tagged With: accounting departments, complexities, emergency timeframes, massive data collection, old saltine crackers, original drafts

2021 Self Insured Workers Comp Resolutions – The COVID Effect

January 7, 2021 By JL Risk Management Consultants

2021 Self Insured Workers Comp Resolutions COVID Caused A Few Changes

Most New Year’s Resolutions come from altering the resolutions from last year.   The 2021 Self Insured Workers Comp resolutions will be no different.   Keeping the resolutions from last year and adding a few changes for COVID should suffice for 2021.  

new years 2021 workers comp self insured resolutions

Public Use License – Vyacheslav Argenberg

 

I usually write the resolutions for the next year in December.  With so many rules changes and changes in the political environment, waiting until after all the elections seemed the best way to handle the 2021 self-insured workers comp resolutions. 

The 2020 Self Insured Workers Comp Resolutions center around sustaining success in your program and fixing a few issues that may be costing you dearly.   Some of these resolutions come from old resolutions. 

Search self-insured resolutions for suggestions from the past.  Any changes to the 2020 resolutions are in italics.  

  1. You are paying directly from your budget.   With the advent of COVID – reviewing your loss runs online, not on paper at monthly or quarterly intervals is beyond critical now.   Following the payment patterns become critical if you have incurred several claims.  Monitoring the outflows of claims payments cannot be just an exercise in reviewing a loss run.  You must dig deeper to the granular level of individual payments.   Remember, the adjusters are spending directly from your accounts.   If you have many employees working from home, the learning curve accident will come into play as
    No Frills Account on 2021 self insured workers comp resolutions is directed to the bank

    Wikimedia Commons – Samantray renuka

    they return to their regular jobs. 

  2. Those festering medical-only claims usually turn out to be your worst nightmares.  Watch the claims closely that have no Indemnity paid but have a large amount of medical paid quickly or a building medical reserve with no closure.   Claims festering becomes a ticking time bomb if these claims are not monitored. 
  3. Is your company still large enough in a state to justify self-insurance?  Companies change locations quickly.  Many states require a minimum of liquid assets and bonds per state, not per company.  Watch the minimums in each state.  If your company has had to cut back its workforce, self-insurance may not be the correct option.   The fixed costs per state may not justify being self-insured in states where you were self-insured in the past.  
  4. Having a working relationship with your claims adjusters becomes a must from day one.  See #1 above.  The adjusters in your TPA become quasi-employees as they are spending directly out of your budget.  One of the first tasks we often perform in a self-insured review involves establishing which adjusters are working on what claims.   Most claim adjusters welcome emailed questions if they are not vague or argumentative. 
  5.  Obtaining and understanding your LDF (Loss Development Factor).   Yes, your company may have gotten away from the E-Mod system.  LDFs become your claims and risk management GPS.  Many software
    Sustainability for 2021 self insured workers comp resolutions chart

    Wikimedia Commons – Sqivrx10

    packages will produce LDFs.   The inputs into the equations sometimes cause confusion and skewed numbers.  If you do not feel comfortable calculating your LDFs, seek out assistance.   The LDFs may become more inaccurate if they are backloaded with full claims payment data even though your present and future workforce may have shrunk.  Review the number you submit to any actuary very closely.  

  6. Becoming self-insured is not a fashion statement.   I have analyzed and advised many self-insureds to stay where they are in the insurance process.  Just because you are now large enough to be self-insured does not mean you should take steps to leave the E-Mod system behind.   See #3 above, is your company still large enough or going to be large enough in a certain state to justify self-insurance?  Every company wants to be self-insured, but should you stay with self-insurance – hard one to call. 
  7. Setting your level of reinsurance can be tricky.   Most potential self-insureds think that $250,000 is the only level.   Many active reinsurers reinsure worker’s comp self-insureds from $100,000 per claim.  Yes, the insurance is more expensive than $250,000 per claim.  One has to stop and think if they would have any claims that would split between $100,000 to $250,000.  

    Medical Assistance for 2021 self insured workers comp resolutions tour

    Wikimedia Commons – Cjp24

  8. Asking the State for assistance. States have become much more helpful to self-insureds.  Each state’s Department of Insurance does not want to have a bucketful of failed self-insureds on their lists.  Assistance with self-insurance applications seems to have increased over the last 10 t0 15 years.   Not too long ago, the process was almost a guessing game.  
  9. Looking at other insurance markets.  The alternatives to self-insurance have become a cottage industry of sorts.  Many consultant companies, agencies, and captive managers aligned their services as alternatives to self-insurance without incurring the full risk.  These companies have quietly placed themselves in certain markets and performed well.  PEOs have become a very viable option since the start of 2020.  Yes, PEOs consist of returning to more of a premium structure than resembling self-insurance.  
  10. Intensify the use of My Six Keys.  The keys have helped self-insureds very often over the last 20 years.  See this page for the Six Keys. You probably already know them.   The keys have not changed since the 1980s.   Return to work will take on a new connotation this year with at-home workers return to work.  The return to work for injured employees may have been delayed due to COVID-19.   We have seen many office visits and surgeries postponed or canceled since March of 2020.  Having patience with medical treatment delays seem to have worked out for most employers.  Office visits and some surgeries have begun again in some states.  Each state has its own protocols on medical treatment.  #11 below became very important in 2020. 
  11. Medical networks become more critical to self-insureds success over the years.   Having an industrial minded physician with a good bedside manner makes claims costs go down.   Remember, you are spending directly out of a budgeted account.  Return to work becomes tantamount to your program’s success.  As with the recommendations for non-self-insureds, COVID-19 may have made your workforce become very distributed across a larger area.  If someone is injured while working at home, where do you send them for treatment if they have a home worker injury?  Yes, they do happen.  Workers Comp Boards do not appreciate requiring an injured employee to drive 1.5 hours for workers comp treatment. 
  12. Your program will likely take hits over the years.  Not every year can be chalked up to a banner year.  Risk is a risk.  Expect the best but prepare for the worst (reinsurance, medical networks,
    Medical networks of 2021 self insured workers comp resolutions brain anatomy

    Wikimedia Commons – Martin420

    return to work program, etc.).   

  13. Keep your C-Level Executive or company owners updated on how the program progresses over time.   Many times, I, as a consultant, informed the Executives what was going on in their programs.  A truncated loss run with a mini claims status works most of the time.  Do not operate on an island.   With many employees being spread out over a larger area including your injured employees, C-Level Executives need to know very current information on the company’s workers compensation program.  A loss run analysis report works well.  Keep it concise. 
  14. Watch the budget for expenses (ALAE) that are not related directly to claims payments.   Private investigators, defense attorneys, rehabilitation nurses (well worth it), and other ALAE are now being paid directly out of your budget.   In some states, the costs to handle and facilitate claims totaled more than the claim payouts (Ouch!) 
  15. Look at the E-Mod system for a few pointers.    Even though your company pays all the workers’ compensation costs, step back from payments, and analyze the risks.   The number of accidents you may have in a year may look small in total.   However, the E-Mod system looks at the number of claims per year being riskier than just one disastrous claim.   Any one or more of the smaller claims can turn into a huge claim.  A claim is a bundle of risk.   Many claims equal a snowball of risk going down the hill.   Rating bureaus have adjusted their formulas to reflect an increased risk with a group of claims vs. one bad claim.   Why did they adjust the numbers?  They have databases that show repetitive accidents cause a higher ri
    Budget for 2021 self insured workers comp resolutions growth

    Wikimedia Commons – Grillofrances

    sk for a certain employer.  With all of the COVID-19 changes voluntary insurance and the E-Mod system, self-insurance and the E-Mod system have gone on divergent paths when considering risk.  I cannot say as of now if the E-Mod system can aid a self-insured in analyzing risk.  

I could post many more resolutions for self-insureds.  Many times,  I write articles pointed towards non-self-insureds.   This article was purely for the 2021 Self Insured Workers Comp resolutions.    Good luck in 2021 and thankfully goodbye 2020. 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Workers Comp Resolutions Tagged With: argumentative, backloaded, elections, handle and facilitate, quarterly intervals, regular jobs, sustaining success

2021 Workers Comp Resolutions – Few COVID-19 Changes

January 6, 2021 By JL Risk Management Consultants

2021 Workers Comp Resolutions – Huge Change From 2020?

The 2021 Workers Comp resolutions began with waiting until all the election cycles had been completed from 2020.  I usually crank out the resolutions in December of the prior year.  With so much occurring in forgettable 2020, these resolutions were the toughest ones to produce in well over a decade.  

2021 Workers Comp resolutions new year fireworks

Wikimedia Commons License – Robert Miguel

Looking Back At The 2020 Resolutions – Starting Point

Workers Compensation has not really changed that much over the last 30 years.   Yes, the laws/rules have changed.  The basics have stayed the same and will likely not change that much unless, in my opinion, Workers Comp Federalization occurs in the future. 

The Affordable Care Act was a step towards federalization.  A few very small steps in legislation could have created a Workers Compensation National Fund similar to one of the non-monopolistic State Funds. 

Building 2021 Workers Comp Resolutions – Using 2020 Resolutions

 Let us go over the last years’ resolutions and either eliminate, improve, or replace each resolution.  My comments are in italics for each one.   Many of the resolutions are still valid as written in 2020.  I left those alone.  

  1. Check the resolutions that I wrote each year for the last 11 years for ideas.   You can type resolutions in the search box.  The resolutions should come up in date order – newest to oldest.   If you wish to delve into workers comp cost savings, some of the old resolutions that I removed from the list might benefit your
    Power of words for  2021 workers comp resolutions is written

    Wikimedia Commons – Antonio Litterio

    company.  Believe me, your time spent will be well worth it.  

  2. Were there any surprises in your Workers Comp program?  If so, find out why they occurred so they will not become worse in 2020 and beyond.  The COVID-19 changes your company experienced fits well into the surprise category.  See resolutions #5 and #6 for changes that may need to be made quickly in your workers’ comp program.   
  3. Read your current Workers Comp policies, including the endorsements.  If you have questions, email your agent.  This has not changed since the first article on resolutions.  We always receive questions when the premium audit has finished,  and the premium audit bill has been produced.  Catch any policy changes (endorsements) when they are endorsed, not after the fact when a bill arrives from the carrier. 
  4. Read your current Workers Comp loss runs for ALL claims over the last 10 years.   The new analytics packages examine much longer time spans than just what your E-Mod covers.  If you have any questions, email your adjuster. 
  5.  Dust off your claims reporting guidelines.  With the smartphone society we live in – the speed of information becomes very critical at the beginning of a claim.   This resolution has become quite a problem over the last few months with COVID-19 causing an increase in employees working from home.  Have you adjusted your claims reporting guideline since February 2020? J&L now has a stack of claims we are reviewing that started with in-home accidents turning into large claims as no medical control was used and the claims were reported very late by the injured employee. 
  6. Update and clarify your medical treatment network.  Medical providers change over time.  Are you using your carrier’s medical networks for additional savings?  Do you know where to send injured employees with certain
    Medical Treatment of 2021 workers comp resolutions facilities

    Wikimedia Commons – DFID – UK Department for International Development

    injuries?  Does your original treating physician know where to refer your injured employees?  This one has changed so much with employees working from home.   Your medical treatment network may need to expand for the initial treating physician if your employees live far away from their previous workplace.  Workers Comp Judges do not like to see employees have to drive a long route to see a physician the employer asked them to see for their injuries.   Adding on new medical treatment facilities may take some time to develop.  If a remote worker has an in-home on the job injury, the time will be well-spent. 

  7. Create a job bank.  Do your treating physicians know what jobs you offer and what light duty positions are in place if an injured employee returns to work.  The post-COVID job bank can be complicated at best.  Whenever the lockdowns are lifted, valid job banks will be needed to cut workers’ comp costs.  Updating or creating them now may be a great project for someone working from home.   
  8. Review your return to work program.  Accommodating injured employees with light-duty jobs can save an employer thousands on just one claim.  The days of an employer only allowing a full-duty return to work is coming to an end.  
  9. Trust of the employer before an accident causes a quicker return to work and better claims outcomes – multiple WCRI studies verified this fact over the last 5 years.  With many employees being remote, employee trust of the employer becomes even more critical.  Many of the employees injured working at home felt the need to treat under health and not report the claim to their employer. 
  10. Explore alternative coverages such as PEO’s, self-insurance, captives, etc. if you must have a Mod below 1.0.   Many contractors, including governmental, require their subcontractors have an E-Mod of 1.0 or below.   Having an E-Mod of 1.2 when your company needs a 1.0 can wipe out 80% of an employer’s business
    Joining and attending 2021 workers comp resolutions meetings

    Wikimedia Commons – Raysonho @ Open Grid Scheduler / Grid Engine

    overnight.  Unfortunately, NCCI and the other rating bureaus have become a de facto credit bureau.  Is it fair?

  11. Analyze your premium audits very closely.  Does it look right?  Many independent contractors are now being added into the audits.  Certificates of insurance are golden in this situation. 
  12. Join and become active with an association of similar companies.  For some reason, I have found over the last 25+ years that companies that join and participate in their related associations have lower Workers’ Comp costs.  I have never pinpointed the exact reason.   With the advent of online conferences, the attendance of these online webinars makes joining and attending association meetings much easier.  Many associations have free or greatly reduced conference costs due to overhead expense reductions. 
  13. If your company expands into other states, those states’ Workers’ Compensation rules and laws may be totally different.  Local defense attorneys usually have summary cheat sheets that cover the state’s WC rules in a few pages. 
  14. Monitor any of your subrogation files using a diary system.  Do not leave claims money on the table and walk away.   We see this often in WC files.   Make sure the adjuster writes the initial claim letter against a third party timely.  
  15. Get online access.  I can tell you after reviewing claim files since the 1980s, online access to your claims saves time, aggravation, and premium dollars.  A loss run lets you know what has occurred in a claim.  Online access
    Online Access for 2021 workers comp resolutions bank app

    Wikimedia Commons – Tinkoff Bank

    lets you know what is occurring now on your claims.  

  16. I added this one in as many workers will return to their jobs in 2021 having not worked in the job for over a year.  The learning curve (accident curve) shows when employees first return to their jobs their risk of injury is similar to a new employee.  

The 2021 Workers Comp resolutions for self-insureds are coming out tomorrow.   They, too, became very complicated to complete as did the above resolutions. 

 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Workers Comp Resolutions Tagged With: analytics packages examine, February 2020, forgettable 2020, initial claim letter, light-duty jobs, wish to delve, working from home

NCCI State Advisory Meetings Worth Your Time? – Most Definitely

December 17, 2020 By JL Risk Management Consultants

NCCI State Advisory Meetings – Golden Nuggets of Info Treasure Chest 

The NCCI State Advisory Meetings also called Forums still provide a huge amount of information for agents, employers, underwriters, adjusters, and other data wonks.   I have recommended this area of NCCI for at least 15 years.  

NCCI is the rating bureau for 40 states – based in Boca Raton, FL.  In the late 1980s and 1990s, I used to work across the street from their HQ.  

Now, of course, they record the meetings due to COVID-19.   Even if they do not have a state forum in your area, the NCCI state advisory meetings can provide you with a ton of great info.   Follow along here and I will show you my angle on the data provided by NCCI. 

Let us look at Arkansas – hang on a minute – this is going to prove itself to be worth your time (promise). 

NCCI analyzes data in Arkansas or any state at:

  • State Level – as expected 
  • Regional Level – are you thinking of expanding into other states? 
  • National Level – compared to the US stats 

You can find the Arkansas Forum pdf here.  Download it, no really go ahead and download it.   Go to Slide 44.  In one slide you can see very quickly the Indemnity and Medical Benefit-Cost split in Arkansas, and n the region:

  • Louisiana
  • Missouri
  • Mississippi 
  • Oklahoma
  • Tennessee
  • Texas. 

The national statistics are also represented on the slide.   Wow, a plethora of info in 10 seconds – not bad, right? 

In case you do not know what is included in indemnity and medical benefits, there is a slide for that info.   See Slide 56 for a full glossary of terms.  By the way, NCCI does not mind if you download their presentation slides (thanks NCCI). 

OK for those who did want to download the slide, here is the thumbnail of the slide, click on it to see a larger picture. 

Graph from NCCI State Advisory Meetings - Arkansas

(c) NCCI 2020 – All Rights Reserved

Three things you can quickly take from just one chart are:

  • Arkansas’s indemnity benefits are lower than the region and the US
  • The region’s benefits costs are very similar to the US 
  • Medical benefits are 56+% of a workers comp claim compared to 65% for Arkansas 

The regional figures remain one of the best comparisons for companies that:

  • Agencies that want to write in more states 
  • Employers considering expanding into states in that area 
  • Arkansas employers looking to expand 
  • Risk managers can use this info to the nth degree

The Kid’s Chance organization on slides 39 – 41 should always be a stopping place to read about a great grass-roots organization started in 1988 in Georgia.   They provide scholarships to the children of very severely or fatally injured workers across the nation. 

If you want to instead see the presentations online, NCCI State Advisory meetings can be viewed by clicking on the respective state.  

 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: NCCI Tagged With: Arkansas, Boca Raton, Missouri, scholarships to the children

Workers Comp Medical Treatment – Faster is Better

December 16, 2020 By JL Risk Management Consultants

Quick Workers Comp Medical Treatment Key To Cutting Costs 

The main Key To Cutting Your Insurance budget remains providing quick workers comp medical treatment for your injured employees.    Having a medical network is a critical cost saver even if you are a small employer. 

workers comp medical treatment scan

Wikimedia – Paola.navarro.fit

A Goldmine of Workers Comp Medical Treatment Articles

If you wish to read further, click on this search to read many of the articles I have written over the last 12 years on this very subject.   You can also print them out or save them for later reading or as a source to quote for your own articles or blogs.

Google decides which articles are more important.   J&L has little control over the ranking.  Google usually ranks them very well. 

Pre-recorded + One Upcoming Conference On Responsive Medical Treatment  

Two venerable organizations have recorded or will provide an upcoming videoconference on quick workers comp medical treatment.  

WCIRB – Good one from last month – Study Link + Presentation Slides

The study link is here.  PDF file.

The presentation slides link is here.  PDF File.  

Yes, the WCIRB only covers California.  Almost all the time I have read medical treatment studies from the WCIRB, they align with the rest of the nation.  

Dave Bellusci is one of my favorite Workers Comp prognosticators.    Both files deserve at least a quick read. 

WCRI – Quick Workers Comp Medical Treatment – Physical Therapy 

WCRI provides a great webinar and study on Thursday (12/17) at 2 PM East Coast time.  One can look at this more globally as providing rapid medical treatment is a money saver. 

I read this study when it was published.   You can find it here along with a link to their free Medical Cost Index Study – another one worth reading. 

From WCRI – (Sign up here for the webinar) – there may be a charge for non-members

As an increasing number of workers with injuries are receiving physical therapy (PT), this WCRI study finds that for workers with low back pain (LBP) only injuries, early initiation of PT is associated with lower utilization and costs of medical services and shorter duration of temporary disability (TD). The study focuses on claims with LBP-only injuries, recognizing that PT is often used as first-line treatment for LBP and other musculoskeletal injuries before considering opioid prescriptions and invasive procedures.

The webinar will address the following questions:
• How often do workers with LBP-only injuries receive early vs. late PT?
• Does early PT help reduce utilization and costs of medical services and shorten TD duration?
• What factors may have considerable influence on PT timing and outcomes?

This study is based on nearly 26,000 LBP-only claims with more than seven days of lost time from 27 states, with injuries from October 1, 2015, through March 31, 2017, and detailed medical transactions up through March 31, 2018. The 27 states are Arkansas, California, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Wisconsin.

The Bottom Line On Quick Workers Comp Medical Treatment

Three venerable organizations – The WCIRB, WCRI, and J&L Risk Management have all shown that with workers comp medical treatment – the faster the better to cutting workers comp costs.

 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: medical networks Tagged With: Dave Bellusci, musculoskeletal, New Jersey, organizations, PT timing and outcomes, videoconference

Workers Comp Premium Calculation Video – Great Explanations

December 11, 2020 By JL Risk Management Consultants

Workers Comp Premium Calculation Video – Good Quick Explanation 

This 4-minute video is well worth your time.   The video is from C3 Insurance Academy.   You can reduce your viewing time to three minutes if you do not wish to see the alternate shortcut way to figure your premiums.  This is a great job by C3 Insurance Academy. 

I sometimes find videos on YouTube that are worth watching on Workers Comp.   This would be one of them.   

 

 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: premium Tagged With: alternate shortcut, C3, Insurance Academy

An Apology To Our Article and Newsletter Readers

December 10, 2020 By JL Risk Management Consultants

Crashes and Late Newsletter

Last week, we had a web consultant company tie up a few loose ends.  One of the consultants accidentally clicked a button that sent the website reeling.  

A very quick explanation – the website is set up as   

  • cutcompcosts.com/year/month/article name    

The consultant changed all 2,000 web pages and  1,800 articles to

  • cutcompcosts.com/article name 

All the internal and external links were set up on the first example.   If you accessed the website it was slow or gave you the dreaded 404 error or the even more dreaded 500 Server Outage (Ouch!)   

We rebuilt all the databases.  As you may know, it takes time for everything to straighten back out to normal.  

We try to send the newsletter out on Thursdays at 1 PM.   We are holding it until tomorrow morning Friday, December 11th to make sure we did not miss any leftover bugs, gremlins, or grinches.

One button clicked and BOOM!   Yes, we had backups, but by the time we figured out the problems, we could not turn back the dial a week.  

Thanks for your understanding.  Whew!  What a week!

 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Misc Tagged With: consultant company, gremlins, leftover bugs

AIC Associate in Claims Designation Article Most Popular of 2020

December 10, 2020 By JL Risk Management Consultants

Associate In Claims (AIC) Designation Popularity Positive Sign 

The Associate in Claims (AIC) articles that I wrote over the year were the most popular article search on the J&L website for 2020.  Usually, I check later in late December to see which articles were the most read for each year.  

One unusual statistic that stood out was the number of times the Associate in Claims articles were read that were written over the last ten years.

Picture of Thumbs Up to AIC Designation

Wikimedia License – Zach Catanzareti Photo

 

You can find the article links in the next section.  The articles are worth a read if you want to see how to start working on adding designations to your resume’.

This year, the AIC article was the most clicked on out of all the articles (almost 1800) that appear on this blog.   This interest shows mainly three things:

  • Self-improvement in the insurance industry is at an all-time high
  • Working at home during the pandemic cause a higher level of self-awareness
  • Self-Study is easier if you have more “alone time”

Associate in Claims AIC Articles

The list of AIC articles is:

How Long To Get AIC Designation 

10 Secret Ways To Attain AIC Designation Faster

AIC Designation Never Looked Better For Workers Comp Adjusters

One can read the articles in 30 minutes or less.   The most popular of the three articles was the 10 Secret Ways articles.   I cannot stress enough if you are very interested to use the Jack Keir For Success Books mentioned in the articles.   The links to their website are there. 

Benefits of Having Your AIC 

A Second Look – The AIC Gets You Noticed.  

If your resume’ or CV is stacked in a pile online, the AIC may likely at least get you into an interview or second look.  When I was administering over claim departments, if an adjuster/supervisor/manager had attained the AIC, it made me look at that person’s background very closely. 

Even now if I need to bring in a contracting consultant to assist me with some claims project, the AIC designation always makes me retain that person’s resume’ even if I may not have used their services. 

If a Senior Adjuster, Supervisory, or Manager job posts at your company, the AIC may assist you in receiving a promotion.   I was promoted to a Senior Adjuster within two months of passing all the AIC courses after receiving a letter from the Executive VP congratulating me on my accomplishment. 

Reimbursement by Carriers/TPA’s and Other Companies

Check with your personnel manual, HR Department, and Supervisor to see if you can receive reimbursement.   One caveat is that you need to make sure you finish the AIC courses rapidly so that you do not have to go out-of-pocket for a long period of time.   

Even if you do not receive reimbursement, Lifetime Learning Credit or American Opportunity Credit means that you can subtract the monies paid out from your taxable income.   This is not a deduction, but a very valuable credit.  Check with your tax advisor for more info.  The link will take you to the Motley Fool webpage on the credit.

AIC Not Just For Adjusters

Understanding the claims process can benefit 

  • Agents/Brokers
  • Underwriters
  • Actuaries
  • Risk Managers 
  • Many other insurance positions.

Amazing Associate in Claims Statistics 

  • 95% of completers said that their designation demonstrates professional competency
  • 93%of completers gained advanced knowledge.
  • 81%of those in their career less than 2 years said that earning this designation increased their overall job opportunities

How To Get Started on Your AIC 

Check out the Institute’s page here on getting started.   You can contact me if you have any questions on our Contact Us page.  Good luck and congrats if you have decided to obtain your AIC – Associate in Claims designation. 

 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: AIC, Insurance Related Designations Tagged With: HR Department, Manager job, Self-improvement, senior adjuster, Success Books, Underwriters

Reopened Workers Comp Claims – Watch The Reserves

December 3, 2020 By JL Risk Management Consultants

Reopened Workers Comp Claims – Big Problem

When does a reopened Workers Comp claim cost more budget for insured and self-insured employers?

picture of wise old workers comp reopened claims owl

Public Use License – Jordiferrer

I reviewed a file this morning that had one of the classics that cause agents, risk managers. underwriters, rating bureaus, and most importantly insureds to become very irritated at claims adjusters.

Adjusters have a tough enough time making everyone happy (think impossible) 

As with my last article, an easy fix can be accomplished. I will give you the exact example with all the names removed for anonymity.

UNITSTAT Date vs Reopened Workers Comp Claims

All Was Not Well, as Reopening Made The Claim Not End Well

A very good Senior adjuster had handled a claim very well, in my opinion.  Good job! The file was closed timely.   The claim was an eye injury.   Those claims can be complicated sometimes.  

The injured employee, being a conscientious employee that was moved into their home from the office increased her dedication to the utmost.   She worked 15 hour days for her employer – possibly too many hours.   Here is an E for Effort from me to her.   

A good employee that had an eye injury on the job was only out for two weeks.  This is one of those claims where the employee, employer, carrier, and provider all worked together to return a good employee as soon as possible to gainful employment.   

The employer provided her a desk-type job.   My Six Keys For Saving On Workers Comp claims were followed.  All parties in the claim did an excellent job.   

Because the employee only had two weeks out of work, the reserves were set very accurately.  The medical portion of the reserves was set very high due to the possibility of eye surgery, which never happened with the injured employee’s medical treatment.     

Check here for articles on UNISTAT Date if you want to see more about them.   In short, think 6 months after the policy expiration for timing. 

Just Bad Timing?

This situation happens quite often.   The file was reopened with the old reserve even though it was just to pay for a few medical bills.  The bills totaled $845

The file was reopened with in excess of $20,000 in medical reserves.   What happened from there was the injured employee was seen and all medical bills were paid.   Even if there was a future office visit, the file reserves were left open with $20,000+.  

The UNISTAT date hit and Boom! – $20,000 of extra reserves hit their Experience Modification Factor.   

Moral of The Reopened Workers Comp Claims Story

Reopened files happen often.  The main idea – regardless of timing – is to reclose the file or reduce the reserves quickly when the file is reopened to fit the situation.  

No, $20,000 was not a tragedy in this situation.   

I have seen files during the pandemic in much larger amounts for reopened workers comp claims.   No, I am not being too picky.   

 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: workers comp reserves Tagged With: bills totaled, conscientious employee, desk-type job, larger amounts, reclose the file

Workers Comp Liability Subrogation – Vehicle Accident Steps

December 3, 2020 By JL Risk Management Consultants

Workers Comp Liability Subrogation – Seven Steps For Vehicles

What Is Workers Comp Liability Subrogation for auto accidents?  Let us take an example I have on my screen in front of me. The insured employers and adjusters working on this together allow for quicker recoveries from any third party in case of an automobile accident that results in a Workers Comp claim. 

Truck workers comp liability subrogation pic

Wikimedia Commons – Celica21gtfour

A great subrogation example and definition can be found here. 

This article points to use by adjusters.   Insured employers and others can help the claims staff do their investigation by assisting the adjuster.  Any time anyone can help the adjuster do their 13 job duties, the claims Total Incurred will be lower which will result in lower premiums. 

Self-insureds, you should pay attention as this article can assist you to return cash to your budget.  

One of my huge concerns right now in the insurance industry adjusters used to be trained in all lines of coverages such as:

  • Automobile  – we are talking about this one today
  • Premises Liability
  • Product Liability 
  • Contractor/Subcontractor Liability 
  • Miscellaneous  lines of insurance

The Seven Steps  For Automobile Accidents

  Improving your Workers Comp Liability Subrogation Investigation

Let’s go over the seven steps together – easy peezy.  One extra step is that if you feel you are in over your head then review it with your claims supervisor or manager and possibly local legal counsel or your staff legal counsel.  

Consult your claims manual in case it differs from my suggestions (not legal advice).  You can do this without having to use a service to do it for you. 

  1. Do not dismiss the workers comp liability subrogation accident.  Just because it does not look like a third party is not possibly responsible, do not just check the No box.    I have a claim right here in front of me where the adjuster did just that.   What the adjuster missed was the next step.  I am not being picky. 
  2. Obtain the police report.  This used to be a huge task.  With the advent of the internet, this step became easier.   Read the police report.  The address of the possible responsible third party shows up somewhere in the police report – very important.  Review who was ticketed.  If you cannot tell who is the third party’s insurer from the police report, use the Index Bureau (should be in your system.) 
  3. Take Statements – preferably recorded, or have the person write down what happened, sign, and mail it to you.  A file note that you talked to someone is not sufficient.   People tend to forget the specifics of the accident months or years later.  Caveat – if you take a recorded statement – offer to send a copy to the person giving the statement.
  4. Do everything in writing, not by email.  You may need to explain the actions you took on the file to a court or your attorney.   Priority Mail automatically tracks your letter or use Certified Mail.   Once you discover what insurer the possibly responsible party has for coverage, write them immediately, time is of the essence.
  5. Very important – once a third party has accepted liability, then adjust your reserves accordingly.  Do not leave unnecessary reserves on the table.  The rating bureaus, agents, actuaries, data reporters, and the insured employer will thank you later for keeping the appropriate numbers. 
  6. Make sure any funds recovered are posted to the file – should you leave the file open for the recovery?  Consult your claims manual or supervisor.   Reopening the file and forgetting to close a file that had a huge reserve can be very harmful to the insured – see my next article on that situation. 
  7. Big secret one that may save the subrogation – Call the Assistant District Attorney in the local county where the accident happened if the third party was ticketed.  Tell them who you are and that you have a subrogation lien on the file before the date of the hearing.  Why?  Because if the Assistant DA dismisses the ticket then your subrogation lien just faded away.   This suggestion should be reviewed by your supervisor and staff attorney before you make the call.  Do not run afoul of the local law in that jurisdiction or your own jurisdiction.  

These seven steps will help any adjuster with the Workers Comp liability subrogation of automobile accidents.   Insured employers may want to keep a diary of the file – see this article to accomplish that task. 

 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: subrogation Tagged With: easy peezy, Index Bureau, Mail automatically, Miscellaneousย  lines, Premises Liability, Take Statements

ARM Designation – Claims Staff Make Your CV Resume’ Shine

November 19, 2020 By JL Risk Management Consultants

Venerable ARM Designation – Beyond the AIC For Claims Staff 

The ARM Designation may be a good fit and advance your claims career at light speed.

ARM Designation and Hammer Box

Wikimedia Commons License

One of the questions I often receive from  Workers Comp claim staff is – What can I or we do to advance our claims career quickly?   One of the most widely read articles on this website is the AIC (Associate in Claims) designation article.   

The search for that topic means people are searching for ways to advance quickly and show a level of dedication to their claims career.   Having the AIC means that you may likely be placed at the top of the resume or CV pile in any organization.   

The #1 question I receive from AIC designees is  ‘What Can I add to my AIC to make me stand out among other job applicants”  or “What is the best path for my future if I want to branch out from claims?”.  

The ARM Designation would be the answer.  The AIC shows a commitment to claims where the ARM designation means you are looking for a career possibly beyond claims.  

Associate in Risk Management – What Other Organizations Are Saying 

RIMS says: (Risk and Insurance Management Society)

To be an effective risk manager, you need to develop the skills that are vital to effectively controlling, assessing, and financing risk. The Associate in Risk Management (ARM) program helps you enhance your risk management skills by teaching you how to build and implement a balanced risk financing strategy using retention, transfer, and hybrids.

ARM helps employees to:

Enhance contribution to the organization’s value by acquiring skills needed to develop effective and thorough risk assessments.
Increase participation in risk control programs through a better understanding of staff motivation.
Support the organization’s overall financial goals by learning to build and implement a balanced risk financing strategy using retention, transfer, and hybrids.

We recommend ARM for: Agents/brokers, agency principals, line of business managers and executives, risk managers, and operational risk staff for banks and insurers.

The Institutes – organization that provides the ARM Designation says:

Associate in Risk Management (ARM™)

Make a real-world impact by gaining a holistic and strategic understanding of risk assessment and treatment.

  • 79% of completers said earning the ARM designation prepared them for their long-term career goals.
  • 79% of those in their career less than 2 years said the ARM accelerated their career
  • 93% of ARM completers would recommend The Institutes’

Hedging at 79% – accelerated their career in 2 years – Payoff!!!

ARM Designation and Expert Witness Work 

I have used concepts and often referred to concepts in my ARM textbooks when I write expert witness reports. Local and Federal Judges have agreed with my reports on those concepts often – even ruling for summary judgments using my reports alone.    

Writing Risk Manager expert witness reports using “plain speak” concepts that I learned in my ARM curriculum has been one of me fortes’ for over 15 years.  

Secret Way To Study For The ARM 

Jack Keir’s study guides have long been lauded for students desiring Property and Casualty designations – 

You can find Jack Keir here.    My response to using his manuals and practice tests was Whew, that was a relief!

What the Jack Keir organization says about the ARM Designation 

ARM – Associate in Risk Management

Recommended for persons who have been working in the risk management field and have some previous experience. Earning this designation requires you to identify and evaluate exposures to both accidental losses and business risks, analyze risk control and financing techniques for each exposure, select of the most effective risk management alternatives, and ways to implement and monitor selected risk control and risk financing techniques.

You have previous Risk Management experience if you have been working claims – you may not have realized it – setting reserves and handling claims is a form of Risk Management – trust me. 

The Best of Everything with Designations

Your employer may reimburse you when you complete your AIC or ARM.  Check out your benefits manual.   Getting your AIC, ARM, or other designations and then being reimbursed – wow, the sun shines bright on advancing your career.  

Many state licensures will accept the AIC or ARM courses as a credit on your license CEs – usually a large number of hours. 

Now go get your ARM designation or other ones.  Good luck!!! 

BIG PS – Just In on the ARM Designation! 

Kevin Quinley over at the Claims Coach 

Kevin, a long time friend and mentor had this to say about obtaining the ARM: (Good info – he is referring to Workers Comp and the ARM)

Pro’s:  knowledge content that goes beyond just knowing about insurance policies; expanding one’s knowledge horizon to a Big Picture, panoramic perspective on workers compensation issues outside of the insurance mechanism. This includes noninsurance methods of addressing workers’ compensation exposures and loss control/mitigation methods of addressing workers’ compensation exposures.

Another “pro” is that the additional credential is a “signaling mechanism” telegraphing to current and prospective employers and clients that you have mastered a subject matter domain that may set you apart from competitors. It may enhance your market value either to your employer and/or your clients. Further, it is a portable credential that you take with you wherever you go in terms of job changes or career changes. It gives you an opportunity to different differentiate yourself from competitors who may lack that credential.

Give the ARM designation a shot – or the AIC, then the ARM.  

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: ARM Tagged With: Brokers, effectively controlling, executive, plain speak, Property and Casualty designations, resume or CV pile

Workers Comp Medical Treatment Networks – What Studies Are Missing

November 19, 2020 By JL Risk Management Consultants

Workers Comp Medical Treatment Networks – Claims Adjuster’s Different Paradigms

After reading a few studies on workers comp medical treatment networks, one glaring aspect becomes apparent very quickly.  As I often have commented on claims studies – “Did they interview any adjusters for input?”  The answer remains “no” on most of them.  

picture of barber dimes workers comp medical treatment network

Copyright US Mint

On a side note, Rachel Fikes over at Rising Medical out of Chicago did just that earlier this year.  Get your free copy of the study here – totally worth a read. 

One recent study by NCCI (you can find it here) says that some treatment costs are higher for “in-network” medical treatment. 

The one huge consideration is  –  do the claims adjusters feel the medical provider is one they can work with over the “long haul” and implicitly trust to treat the injured worker that is their claims responsibility?  

Of course, (and this has been challenged by non-claims persons), the worker’s comp claims adjusters want the injured worker with a legitimate claim to have the best care possible even if it costs a little more.    

The adjusters want to have:

  • Proper medical care that results in the highest level of care possible
  • Return to gainful employment as soon as possible 
  • All benefits paid timely
  • File closure 

Proper Care With The Workers Comp Medical Treatment Networks

 Very often, workers comp claims adjusters have given a large medical network provided by their employer (carrier or TPA).  The informal network that exists can usually operate inside the carrier’s or TPA’s medical network.    Sometimes the physicians are non-network.    

What physicians and other medical providers are contained in this informal workers comp medical network?  Those medical providers are:

  • Trusted to provide the appropriate conservative medical treatment 
  • Have an industrial background – think workers comp or industrial clinic 
  • Huge one – communicate with the adjusting staff by providing medical notes rapidly 
  • Huge one Part 2 – communicates with the employer on the injured worker’s medical status 
  • Refer the injured worker to more specialized physicians (orthopedists, neurologists, etc.) that the adjuster is used to working with on claims
  • Return the injured worker to light duty when possible 
  • Another huge one – seeks authorization from the adjuster for certain medical procedures such as surgery, referral to another medical provider, etc.  
  • Avoids giving the adjuster the Twilight Zone Phone Call 
  • Avoid litigation – Ok, – all employees have the right to consult and hire legal counsel.

When I review adjuster file notes, one aspect I see often is the adjuster is willing to work with an “out of network” medical provider if they cover the above bullet points. 

Sideways Cost Savings 

Is there still a cost-savings element when working with a physician that is not in the carrier’s or TPA’s prescribed network?  Yes, any claims staff that is reading this will be nodding their head now.   

Most medical networks save approximately 10 – 15%.   By working with a medical provider that covers the above points well, the cost savings of an out of work provider can easily cover the 10 – 15%.   I will save you all the math today, it does cover the network savings.  

If one looks at the studies by WCRI’s  Dr. Bogdan Savych, the employees tend to have a better outcome if they trusted the employer before the accident.  I think we can add into that equation the trust level of the medical provider whether or not they are in a workers comp medical network. 

Who can facilitate many of the above items – one of my favorite risk management techniques, the venerable worker’s comp rehab nurse or case manager.  

I am not giving the advice to ignore the prescribed workers comp medical treatment networks.   Then again, the cost-benefit tradeoff may be enough to use non-network physicians and according to NCCI, the non-network physicians may be less expensive.  

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: medical networks Tagged With: Avoid litigation, industrial clinic, long haul, nodding their head now, physicians are non-network, rachel fikes

Workers Comp Adjuster Goals Conflict With Management Expectations?

November 12, 2020 By JL Risk Management Consultants

Advocacy Model vs. Workers Comp Adjuster Goals – A Point Missed? 

Did I miss The Point  – Maybe? 

I recently attended a webinar provided by the National Workers Comp and Disability Conference where some of the Workers Adjuster goals were compared to the expectations of claims management.  

picture of workers comp adjuster goals geophysical survey

Public License – Vadams

Two of my favorite workers comp people, Rachel Fikes of Medical Rising and Denise Zoe Algire of Albertsons Companies led the event.  Those two ladies have always been kind and gracious to me at all times, especially in-person.  

I had written multiple articles pleading with adjusters to fill out the surveys to voice the claims staffs’ opinions on what their goals were during the process of a claim. 

You can sign up here to listen to the webinar – totally worth it if you are in a claims office or if you have any interactions with workers comp adjusters.   

The Survey Says (thanks Richard Dawson) 

The shocking part was the congruence (similarity) between claims management expectations and the workers comp adjuster goals.   Slide #6  had the Top Competencies Alignment between management and the claims staff.   You will need to register to listen to a recording of the conference and to obtain the slides, please do listen to it – take the time. 

The conversation in the webinar focused on:

•    Alignment of frontline staff perspectives with those of claims leaders surveyed in prior years
•    Assessment of job meaningfulness
•    Ranking of company benefits that frontline staff most value
•    Adequacy of new hire and senior staff training
•    Ranking of core competencies and key practices most critical to claim outcomes – the one I am covering today.
•    Assessment of technology and data’s impact on job performance
•    Understanding of advocacy-based claims models

Frontline Staff Rankings

  1. Compensability Investigations
  2. Disability / RTW Management
  3. Medical Management
  4. Claim Resolution / Settlement Strategy 

As one can see, these are the steps to “getting the claim off my list”.  I could possibly be too “old school” in my views, but this is what I always hear from any adjuster that I speak with presently. 

If one opens up any workers comp claims manual, the above 4 are major headings in the manual.  The survey was spot-on to ask those questions (good job).

Yes, we all want to make sure the injured worker receives every penny they are owed timely.  Many states are now ratcheting up the investigations and fines for sloppy or late adjuster benefit actions (payment, filing forms, etc.).  The prior link is behind a WorkCompCentral paywall so I cannot share passages from it. 

Adjusters want to naturally provide benefits timely.   Some of the state-enacted COVID-19 presumptions made adjusting staffs look like draconian claim deniers – very unfortunate.  Occupational disease statutes have long taken care of claimants when a disease has been contracted on the job. 

Did Claims Management And Workers Comp Adjuster Goals Align?

As with any survey, the opportunity to dig deeper exists.  I hope to see the question of Workers Comp Claims management and adjuster goals have a further explanation to it. 

Good job – the survey and results production required a ton of hard work. 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: claims adjuster Tagged With: Albertsons, Compensability Investigations, draconian claim deniers, job meaningfulness, Richard Dawson

Workers Comp Premium Audit Dispute Delay Can Be Very Costly

November 11, 2020 By JL Risk Management Consultants

Premium Audit Dispute Delay Costs Company $500,000 – Ouch! 

Over the last 13 years that I have been writing articles for the J&L website, I have warned very heavily against any type of premium audit dispute delay.   Delaying a dispute of or ignoring a bill from your current or prior carrier often turns into money lost from your company’s budget. 

vector alarm clock ringing premium audit dispute delay

OK, you or your company may not agree with the workers comp premium audit.  Many times, your company must act quickly regardless of the circumstances. 

This website and I provided many articles on this very subject.  Why?  Because I see the leftover problems once a company contacts J&L too late in the premium audit dispute process.  

By the way, thanks to William Rabb and the folks over at WorkCompCentral for providing me with the location of the ruling on a major premium dispute delay.  I cannot point you directly to the article as it is behind a paywall.  

The lawsuit can be found here.  I will not name any of the parties involved in the lawsuit.  I recommend you take a few minutes to read over the decision.    In the proverbial nutshell, this is what happened: 

  1. A company separates from its parent company 
  2. The company then requests a policy from a carrier 
  3. The rating bureau (WCIRB) gives the new company a higher X-Mod than the parent company.
  4. The carrier provides the company with an endorsement on the higher X-Mod
  5. The company thought the X-Mod should have been from the parent company 
  6. At the premium audit, the company is charged with the higher Mod which sharply increases the premium. 
  7. The carrier sends out the premium audit bill. 
  8. The company does not think they should pay it due to verbal guarantees.
  9. The company does not file a response to the collection lawsuit timely.
  10. District Court and Appellate Court says Pay Up.

Experience Modification and not Premium Audit Dispute Delay?

I will not cover the Ownership Rules or what happened when the companies split.  I do not have that information and will not attempt to assess what happened in that part of the dispute. 

If your company disagrees with an Experience Modifier decision by the Workers Comp rating bureau including WCIRB, here are the time rules right out of the manual –  (Note there are some exceptions to the below rules – these are the GENERAL Rules from their ERP Manual:

In the event of the discovery of an error in the current experience modification or the two immediately preceding experience modifications, a revised experience modification shall be published and be effective as follows:

a. The revised experience modification shall be effective as of the effective date of the erroneous experience modification, provided:

(1) The revised experience modification is less than the erroneous experience modification; 

(2) The revised experience modification is published within three (3) months of the effective date or publication date of the erroneous experience modification;

(3) The WCIRB was notified, in writing, within three (3) months of the effective date or publication date of the erroneous experience modification of a possible error; or

(4) The WCIRB notified the carrier of record, in writing, within three (3) months of the effective date or publication date of the erroneous experience modification that the erroneous experience modification was under review.

b. Except as provided in paragraph a, the revised experience modification shall be effective as of the date it is published provided, however, that the revised experience modification shall not be applied if it is published three (3) months or less prior to its expiration.

The above timetable represents very distinct periods of time on the X-Mod changes after a policy goes into effect. 

Endorsements Can Completely Change Aspects of Any Policy 

Any changes to a policy once issued is accomplished by Endorsements.  I have written or spoke on Endorsement many times.  The endorsement letters from the insurance carrier may be more important than the policy itself.   Check out this article on Endorsements.  I have written at least seven articles on Endorsements. 

I have seen up to 75 endorsements on a large company’s workers comp policy.  

Insurance Carriers Now Using Collection Agencies – with different response timetables 

Once an insurance carrier turns over a premium audit bill to collections, a new timetable, besides any of the insurance timetables, kicks in and must be handled properly.  

Knowing your local collection rules/laws may be helpful.  The best tactic to use is responding ASAP to any collection notice in writing with Certified Return Receipt.

We often hear from policyholders with a premium audit bill after the collection agency contacts them.   Please refer to this article on collection agencies. 

No matter if a policy generates a premium audit dispute or an Experience Mod dispute, the clock is ticking.

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Premium Audit Dispute Tagged With: ERP, Ownership Rules, proverbial nutshell, up to 75 endorsements, verbal guarantees., Willam Rabb

California Prop 22 – Nationwide Effect on Workers Comp Debate

November 5, 2020 By JL Risk Management Consultants

California Prop 22 – Not Just A One State Issue

California Prop 22 was overwhelmingly given a thumbs up by the Golden State’s Voters.

state flag of California Prop 22

Pubilc Use License – Makaristos

If you are saying, yes, but I do not live in California, check out the last heading in this article  – worth your time. 

For many years, California had moved towards defining independent contractors as employees.  

California Assembly Bill 5 (AB 5) was passed in 2019. The effects on the independent contractor vs. employee debate were chilling.  The Dynamex Supreme Court decision was the basis for AB 5.   

AB 5 enumerated each industry where the workers should be considered employees.  The Dynamex Decision was very vague as to the exact companies that should not allow the independent contractor classifications.

From truckers to independent press contractors – AB 5 changed the rules of having independent contractors working for your firm.

For instance, many independent writers of worker’s comp articles seemed to disappear overnight. Due to privacy, I will not mention them by name.  

When I traveled to what I thought was going to be an all-day WCIRB Conference earlier this year, I even asked the question to the presenter after they presented on the Class Code changes involved with AB 5 

There are at least three Assembly Bills pending that contradict AB 5 – what effect will that have on how the WCIRB views any Class Code changes or premium audits that involve independent contractors?  The WCIRB told me that they would have to get back to me.  Fair enough. 

According to the Ballotpedia (Updated 10:30 AM Eastern Time today), 58.4% of California voters checked Yes on their ballots.   By the way, if you have not visited Ballotpedia, it is worth a look.  

The Beginning of AB 5 – Dynamex Decision

The Dynamex Decision provided the three tests to see if a California worker was an employee or an independent contractor – they are- 

The worker is:

  1. Free from the hiring company’s control and direction in the performance of work
  2. Doing work that is outside the company’s usual course of business; and
  3. Engaged in an established trade, occupation, or business of the same nature as the work performed

After the Dynamex decision, many employers contacted J&L/me on premium audit and policy confusion.   Their basic question was – How do we tell if the workers working for us are contractors or employees? 

What California Prop 22 Does Not Do 

California Prop 22 does not define any other employees/contractors beyond independent drivers such as Uber, Lyft, and Doordash.   

Earlier I mentioned reporters and other types of workers – these workers are still under AB 5/Dynamex presently.    Prop 22 covered a very defined section of independent contractors. 

More workers may be added to the independent contractor list in the future. 

What California Prop 22 Means For Companies Not in CA 

One of my catchphrases is  – what happens in California will be coming to a state near you.   The Golden State always seems to make rules and regulations that are often adopted by other states in some form.   Massachusetts and Tennessee even used some of AB 5’s wording in introduced legislation.  

Bottom line – make sure your independent contractor contract spells out everything in great detail.  Do not use a boilerplate contract.  A different version of AB 5 or California Prop 22 may show up in your state – be prepared. 

 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: California Tagged With: AB 5, Ballotpedia, boilerplate contract, Dynamex Decision, Massachusetts, Tennessee

WCIRB Delayed Medical Treatment Study Backs Up Six Keys Study

November 5, 2020 By JL Risk Management Consultants

WCIRB Delayed Medical Treatment Study Proves What We Knew All Along 

The WCIRB Delayed Medical Treatment Study can be found here.  The WCIRB (California Workers Comp Rating Bureau) recently published a study on delayed medical treatment due to the recent COVID-19 pandemic.   

picture of COVID-19 WCIRB Medical Treatment Delay Study

Public Use License – Maximilian Schönherr

I was hoping the study replicated or at least came close to the numbers that I had published in the late 1990s and early 2000s that showed if an injured worker experiences medical treatment delays, employers pay dearly. 

Six Keys And Delayed Medical Treatment   

Check out the Six Keys To Workers Comp Savings here.   The Six Keys were developed over time as first a workers comp adjuster and then a consultant.    I sampled 7,000 public entity claims files in 1998.  I performed the same study again in 2008 to confirm my findings.

The Six Keys are:

  1. Timely First Reports 
  2. Medical Network
  3. Return To Work Program
  4. How the Employer Treats the Employee
  5. Management Adoption of Keys 
  6. Understand your final policy bill or premium audit 

My signature presentation subject comes from the first four from the above list.  Those four not being put into place costs an employer 400% more on their claims.  Looking at it from a cost reduction viewpoint, the total cost saving experienced by providing timely medical treatment equals 75%.  

I hoped very intensely that my numbers matched the WCIRB study and report.   Some of my numbers had varied from WCIRB’s numbers over the years.  WCIRB seemed to back up my numbers in this study. 

One exasperating area for the claims department is the Twilight Zone Phone Call.   Doing #1 and #2 on the list quickly means not introducing the claim to a claims department with a filing delay mistake.  The phone call often causes the adjuster to set the reserves to a much higher level than normal. 

In other words, the employer already blew this claim, so the reserves need to be more to cover the increased payments incurred during the lifetime of the claim.    Yes, reserves are set that way most of the time. 

How The WCIRB Delayed Medical Treatment Study Relates To the Six Keys 

Let us look at the WCIRB Study.  By the way, you should download a copy of the study.  It is worth the read.  See the first link in this article to read and download the WCIRB article.   Yes, it is worth your time. 

The chart that made me feel good about my old (yet still accurate numbers are included in the WCIRB charts below.   You may need to click on the chart thumbnail below to see it more clearly.   The charts are from pages 9 through 11 from the study. 

wcirb medical treatment delay study chart

Please click on the chart to see full size

wcirb delayed medical treatment study graph

(c) WCIRB – all rights reserved

 

The charts show that overall when medical treatment is delayed the medical and indemnity costs increase sharply.  These charts are comparing delays due to COVID-19.  “Delays are delays” – the numbers bear me out.   

Both charts parallel the same time when workers comp adjusters set the final reserves for the life of the claim.   Many more charts in the study come to the same conclusion – delayed medical treatment cost employers dearly.  

Post-COVID-19 Recommendations

Long after the COVID situation resolves, the numbers on delayed treatment will stay the same.  If timely injury reports and medical treatment is provided, the savings are approximately 75% on the overall costs.  

The numbers between the WCIRB delayed medical treatment study and the numbers I have seen on file for over 30 years may not match exactly, but they are close enough to cause concern for employers nationwide.  

 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: medical networks Tagged With: 000 public entity, 7, approximately, filing delay mistake, late 1990s and early 2000s, signature presentation

Workers Comp Risk Management Is Like Bag of Apples

October 29, 2020 By JL Risk Management Consultants

A Bag of Apples Shows How Workers Comp Risk Management Works 

Yesterday,  I included a short article with a video from Washington L&I.  The response was very positive on keeping Workers Comp Risk Management toned down to more simplistic terms.  

picture bag apples workers comp risk management

Wikimedia License – Toytoy

The customer is always right. 

Workers Comp Cost Questions

One of the main questions/complaints we here at J&L hear almost every week concerns the high cost of workers’ compensation premiums.  One of the responses to yesterday’s video article came from an old business friend from long ago.    

His comment was “so the more benefits paid out to injured employees, the more premiums paid.”  The subject of the other comments I received was – Why do smaller companies pay more for workers’ compensation coverage?  

Higher Claims Costs = Higher Premiums 

If the adjuster pays more money on a file or reserves the file with higher amounts that are not yet paid (reserves), your company will eventually pay more workers compensation premiums.   The formula I have written the most in articles is:

Total Incurred = Paid + Reserves  

The total incurred figure feeds into what is reported at 180 days after the start day of your workers’ comp policy.  The insurance carriers report the numbers to the rating bureaus – WCIRB, NCCI, and other independent state bureaus. 

The goal of Workers Comp Risk Management is to reduce the costs paid out by using time-tested techniques, and in turn, will reduce an employer’s workers’ comp expenditures by lowering their Experience Modification Factor (Mod).  

The Mod individualizes your company’s risk amongst similar companies (classification codes).   Many other factors affect your workers’ comp calculation of premiums.  The Mod is one that your company can control by using safety measures. 

The rating bureaus usually forgive one bad accident (just bad luck?) – to a point.  The rating bureaus do not forgive multiple accidents.  Using Workers Comp risk management techniques including safety can get your company back on track in less time than just waiting out the storm. 

Smaller Companies Pay More Per Unit of Risk

Unfortunately, smaller companies do pay more per unit of risk.  The bag of apples represents a larger company.   One apple represents a smaller company.   

If you purchase one apple, the cost will be more per unit.  If you buy the bag of apples, then the cost per apple is less. 

A part of your workers’ compensation premiums is calculated this way.   The service costs of providing a small or large company with a policy do not vary considerably even though the larger companies will pay more premium.

The reason a smaller company pays more on a per-unit basis is the risk.  Usually, larger companies have Risk Managers and Safety Departments.  A small employer cannot necessarily afford these departments or employees.   Operating like a self-insured company has its benefits.  

The time for a carrier to recover a loss paid by premiums charged can be 10 years or more.  

Large companies can spread the risk amongst many employees, smaller employees cannot spread the risk out.   

One of the terms that reduce workers’ comp premiums for larger employers is:

Standard Premium Discount

 Discount by Insurance Carrier Type
Premium From: Stock Co.Non-Stock Co.
First $5,000 0%0%
$5,000 – $100,0000 10.9%3.5%
$100,0000 – $500,000 12.6%5.0%
Over $500,0000 14.4%7.0%

The principle behind applying a premium discount to larger workers’ compensation policies is that expenses of handling compensation on a risk are proportionately less, as a percentage of premium, as the risk becomes larger. Typically, agency commissions are also reduced on larger policies.

Let us look at the bag of apples again – using the concept in the previous paragraph, it costs less per apple to provide you with a bag of apples per purchase than just one apple purchased several times. 

Workers Comp Risk Management Levels The Playing Field 

Even if you do not spend over $5,000 on workers’ comp premiums, you can still use workers comp risk management to control your risk and premiums.  A few suggestions are:   

  1. Safety program – some type of safety program needs to be put into action.  Considering premiums as a cost of doing business can harm your company for many years into the future.  Workers Comp is a delayed system.
  2. Loss Control program – if you incur a loss, cut the costs while providing great care for your injured employee by timely reporting the injury, having a medical network in place, and returning the injured employee safely to work as soon as possible.  Check out the Six Keys for more information.
  3. Check out different stores to see how much one apple costs.  Even in the age of COVID, a plethora of workers comp insurance carriers and programs exist in the market. 

 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Risk Management Tagged With: old business friend, plethora, reported at 180 days after, time-tested techniques, waiting out the storm

Workers Comp Rate Setting Calculation – Short Informative Video

October 27, 2020 By JL Risk Management Consultants

A Good Five Minute Workers Comp Rate Setting Calculation Video 

This workers comp  rate setting calculation video caught my eye last week.  The State of Washington’s L&I produced the video.   

state of washington map workers comp rate setting calculation

Wikimedia Commons License -GD2008

Washington is a Monopolistic State.  All employers operating in the state must buy insurance through a state agency.  I am not a huge fan of Monopolistic States. 

States such as West Virginia and Nevada successfully converted from monopolistic funds to a competitive marketplace.  The results were always successful including a reduction in premiums. 

Regardless, the video below is well worth the time.  All Workers Comp rating bureaus including NCCI (National) WCIRB (California) use the same concept for rate setting.    

 

 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Workers Comp System Tagged With: last week, not a huge fan

LCMs – The Hidden Part of the Workers Comp Insurance Process

October 23, 2020 By JL Risk Management Consultants

LCMs – Loss Cost Multipliers – An Important Example 

LCMs (Loss Cost Multipliers) have many definitions.  The main one that I refer to when asked for a definition is:

LCMs are basically the insurance carrier’s deviation from the advisory loss costs that are published by NCCI or your state’s rating bureau. 

picture of rubiks cube lcms

Wikimedia Public Use – Mike Gonzalez

I recently received a message from the North Carolina Rating Bureau that referred me to a list of the LCMs.  Let us look at what the list looks like for 2020 in North Carolina. 

Even though North Carolina is an independent rating bureau, the concept is still the same.   Please note this is public information – nothing in the following list is behind a paywall. 

The list is much too long to include all carriers in the spreadsheet.  Look at the heading and data that is in red.  Yes, those are live and effective LCMs.  

COMPANY NAMECOMPANY EFFECTIVE DATELOSS COST MULTIPLIERAPPLICABLE TO ALL CLASS CODES
ACADIA INSURANCE COMPANY8/1/191.7100Yes
Accident Fund General Insurance Company4/1/201.9500Yes
ACCIDENT FUND INSURANCE COMPANY OF AMERICA4/1/201.3800Yes
Accident Fund National Insurance Company4/1/201.4700Yes
Accredited Surety & Casualty Company Inc4/15/201.4600Yes
ACE AMERICAN INSURANCE COMPANY4/1/201.2500Yes
ACE FIRE UNDERWRITERS INSURANCE COMPANY4/1/201.0630Yes
ACE PROPERTY AND CASUALTY INSURANCE COMPANY4/1/202.0900Yes
ACIG Insurance Company4/1/181.2700Yes
ADVANTAGE WORKERS COMPENSATION INSURANCE COMPANY5/1/161.5810No*
AIG ASSURANCE COMPANY4/1/201.1870Yes
AIG PROPERTY CASUALTY COMPANY4/1/201.7010Yes
AIMCO MUTUAL INSURANCE COMPANY3/1/061.3300Yes
AIU INSURANCE COMPANY4/1/201.0280Yes
Alea North America Insurance Company4/14/051.4900Yes
ALL AMERICA INSURANCE COMPANY4/1/091.6910Yes
Allianz Global Risks US Insurance Company3/1/971.3310Yes
ALLIED EASTERN INDEMNITY COMPANY4/1/202.0000Yes
ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY4/1/202.5270Yes
ALLMERICA FINANCIAL ALLIANCE INSURANCE COMPANY4/1/20181.8500Yes
ALLMERICA FINANCIAL BENEFIT INSURANCE COMPANY4/1/20181.0500No*
AMCO INSURANCE COMPANY4/1/202.0460Yes
AMERICAN ALTERNATIVE INSURANCE CORPORATION4/1/101.5640Yes
American Automobile Insurance Company4/1/201.6470Yes
American Builders Insurance Company6/1/181.6000Yes
AMERICAN BUSINESS & MERCANTILE INSURANCE MUTUAL, INC.4/1/182.5010Yes
AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA4/1/201.2750Yes
AMERICAN COMPENSATION INSURANCE COMPANY4/1/192.1500Yes
AMERICAN ECONOMY INSURANCE COMPANY8/1/171.6400Yes
AMERICAN FIRE AND CASUALTY COMPANY4/1/181.6790Yes
AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY4/1/091.3290Yes
AMERICAN HOME ASSURANCE COMPANY4/1/201.4630Yes
American Interstate Insurance Company9/1/131.6000Yes
American Liberty Insurance Company4/1/201.4500Yes
AMERICAN MINING INSURANCE COMPANY4/1/151.4200Yes
American Property Insurance Company2/28/001.3000Yes
American Safety Casualty Insurance Company9/1/031.4800Yes
American Select Insurance Company10/18/202.3830No*
AMERICAN STATES INSURANCE COMPANY8/1/171.7120Yes
AMERICAN ZURICH INSURANCE COMPANY4/1/091.0950Yes
AMERISURE INSURANCE COMPANY4/1/201.6500Yes
AMERISURE MUTUAL  INSURANCE COMPANY (a stock company)4/1/202.2000Yes
AMERISURE PARTNERS INSURANCE COMPANY4/1/201.0500Yes
Amfed Casualty Insurance Company4/1/191.7500Yes
AmFed National Insurance Company5/1/181.3200Yes
AMGUARD INSURANCE COMPANY4/1/201.6600Yes
AMTRUST INSURANCE COMPANY OF KANSAS, INC.12/1/151.0500Yes
Ansur America Insurance Company4/1/201.3400Yes
ARCH INDEMNITY INSURANCE COMPANY5/15/181.1820Yes
ARCH INSURANCE COMPANY3/1/041.4240Yes
Arch Property Casualty Insurance Company4/1/201.7800Yes
ARGONAUT GREAT CENTRAL INSURANCE COMPANY5/19/101.4500Yes
ARGONAUT INSURANCE COMPANY5/19/101.7400Yes
ARGONAUT-MIDWEST INSURANCE COMPANY5/19/101.1600Yes
Arrowood Indemnity Company4/1/031.2600Yes
ASHMERE INSURANCE COMPANY2/1/171.4000Yes
Associated Indemnity Corporation4/1/161.9690Yes
Association Casualty Insurance Company6/1/070.9980Yes
ASSURANCE COMPANY OF AMERICA4/1/091.5640Yes
Atlanta International Insurance Company 4/1/171.9500yes
Atlantic Specialty Insurance Company4/1/191.3460Yes
ATLANTIC STATES INSURANCE COMPANY9/1/191.4500Yes
Auto-Owners Insurance Company9/10/191.9500No*

 

As you can see, each company has its own LCM.  Please do not think of this as a list of which company charges the least.  Many more variables go into your Workers Comp policy such as discounts, Schedule Credits, etc.  

The companies that have the No* in the last column will have LCMs for different Classification Codes.   Check here for more information on specific filing searches.  

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Loss Cost Multiplier Tagged With: Accredited Surety & Casualty Company Inc, AIG ASSURANCE COMPANY, Arrowood Indemnity, behind a paywall, spreadsheet

Workers Comp Markets Affected By Upcoming Election Cycle

October 15, 2020 By JL Risk Management Consultants

Workers Comp Markets – Hard or Soft May Not Matter 

My brother asked me this question.   Will the upcoming election affect the Workers Comp markets?  He is a day trader of sorts. 

I Voted Sticker Affect The Workers Comp Markets

Public Use License – Public Domain

Writing articles for over 15 years means that I have covered this topic in the past.   My opinion has not changed over the years on the Workers Comp markets. 

Investment Trends Affect The Workers Comp Markets 

Carriers were making a 15% return on every Workers Compensation dollar written.   This figure came from NCCI, so I consider it trustworthy.  The pre-pandemic Combined Ratio was 85%.   

Insurance carriers did not have to rely on investment returns for profit.   The Workers Comp press published many articles recently on the market hardening due to COVID-19.  I agree with that assessment. 

Premium vs. Profitability 

If insurance carriers can make profits by investing in solid and speculative investments, then the need for premium increases subside over time.   

If carriers cannot generate profit off investments, then the market will harden quickly.  Where does any carrier have to look for funds if their investments do not perform well?   The two areas are:

  • Premium increases
  • Becoming more conservative in underwriting insureds (hardening) 
  • A combination of the first two. 

Carriers also have investment/financial advisory arms that I am not considering when I cover profitability. 

Strange Times Defy Investment Trends

Workers Comp markets - Russell 2000

Please click to see a clearer image – Courtesy Yahoo Finance

The economy may be sputtering presently.  The stock markets are extremely healthy (for now).    What does this mean for future investments?   

This screenshot from Yahoo Finance shows the Russell 2000 Stock Index over the last two years.  If you click on the above thumbnail. you can see the chart much more clearly.    The Russell 2000 more closely represents the stock market than most of the other indices. 

The market plunged in March 2020 but has recovered most of the losses.  Investment profits are back in play for now. 

We also cannot forget China’s effect on the overall investment markets.   China still owns a large amount of US Federal Securities. 

From this article on MSN/Quartz 

Beijing could use its stockpile of US Treasury bonds to destabilize the US economy and pressure Washington into backing down.

COVID-19’s Effect on Workers Comp Markets

The long-term effect will not be known for quite some time.   Three weeks ago, I published an article on how the delayed effects of COVID-19 may not be realized until mid-2021.   

The workers comp system is a delayed system.  Only approximately 5% of the data has been reported to the rating bureaus.   Most of the Coronavirus’s effects on Workers Comp will not be known until the end of 2021 or after.  

Check out my article from two weeks ago for the particulars of how Worker’s Comp data will be delayed. 

Bottom Line – Election Cycle and The Workers Comp Markets 

When I write the bottom line sections I usually prognosticate an opinion.  This subject remains a tough one to call.  Will Worker Comp benefit from a Republican or Democratic win in the Presidency, House, or Senate? 

The Workers Comp markets, by nature, are localized as each state (good or bad) influences the markets.  

The House and Senate races will likely have an effect on each state’s local Workers Comp laws and rules.  The Presidential Election may have a minimal effect – that being whether investors remain comfortable in the investment markets. 

I apologize as I do not have a definitive answer on this one.  In 2020, too many other influences have come into play that may affect the Workers Comp markets. 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Workers Compensation Markets Tagged With: March 2020, sputtering presently, subside over time, trustworthy, upcoming election

Contingent Experience Mods – When The Number Is Not the Number

October 13, 2020 By JL Risk Management Consultants

What Are Contingent Experience Mods? 

Last week, I wrote a somewhat controversial article questioning whether insurance carriers should be fined for reporting Mods late. I received a few emails and comments with one from the WCIRB directing me to an NCCI video on Contingent Experience Mods.

Graphic not Pi contingent experience mods

Wikimedia Commons – Public License

I agree there exist reasons for why a Mod would be filed late by the carrier. However, sometimes Contingent Experience Mods are not finalized (see the 3rd bullet point later in this article) or the carriers report more accurate numbers long after the employer must pay premiums using an incorrect Mod.

Contingent Experience Mods are issued by the rating bureaus to let all concerned parties (employer, agent, underwriter, etc.) that more numbers will be added in later.

Once the carrier reports the data to the rating bureau, the Mod will be revised, and a new Experience Mod will be issued for the employer.  

Then again, when is the Mod finalized?

The definition from the two largest rating bureaus on Contingent Experience Mods are:

WCIRB – I could not locate info here at the time of this article.
NCCI – This PDF file from NCCI had a few examples. 

From NCCI – Contingent Experience Mods 

Contingent: This indicates that an experience rating modification factor was produced with missing Unit Statistical data, but met the minimum data requirements set forth in the Experience Rating Plan Manual.

Since mods are produced months in advance of the rating effective date, it is possible that not all data will be received at the time that the mod is produced.

Many People contingent experience mods outside the road

Wikimedia Commons – Øyvind Holmstad

Contingent mods account for less than 1% of the total rating population. A mod can also be contingent for a unit or a specific unit report level that contains errors that make it ineligible for experience rating use. This alerts the data provider that the unit requires corrections for it to be used for experience rating purposes.

To recap, here are a few things to remember:

  • A mod will be either preliminary or final
  • Yes, a mod can be both preliminary and contingent
  • Yes, a mod can be both final and contingent

________________________________________

Other Reasons For A Mod Revision

State Rating Values – The reason that we see most often for an Experience Mod revision is the State Rating Values have changed for the Experience Period.    This has nothing to do with the rating bureau or the carrier.  

These changes occur frequently – more often in certain states.  The Department of Insurance or Workers Comp Commission has revised the rating values for a certain policy or rating period.   

Defunct Carrier (Receivership) — We do not see this reason as often currently.   Ten to 15 years ago, this reason occurred more often.  The carrier may not have data reporting personnel in place to report the number to the rating bureau.  The carrier may have downsized their data reporting department.  The numbers may possibly be reported very late. 

Finalized Contingent Experience Mod Effect 

If a carrier has not reported a certain year of data or will correct the UNISTAT data in the future, the two main effects to the Experience Mod are:

  • Higher than expected claims data – this will increase your Experience Mod (if no change in payroll values)
  • Higher than expected payroll data –this will decrease your Experience Mod (if no change in claims values)

If the year the data is not reported was a year with no claims, you should pursue this heavily with the carrier to make sure the data is reported properly to the rating bureau.  

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: E-Mod X-Mod Tagged With: Contingent, ineligible, no change in payroll values, preliminary or final, receivership

Self Insured Claims Data – Your TPA Has Many Helpful Options Online

October 8, 2020 By JL Risk Management Consultants

Self Insured Claims Data – Going Beyond A Loss Run 

J&L examines loads of self insured claims data every month.  Some TPAs offer loads of information that go beyond just reviewing a loss run.  

picture examining self insured claims data report

Wikimedia Commons – Aw58

Much of the self insured claims data can be reviewed using notifications as bells and whistles.   The ones I like that seem to work well can be set up as emails or notifications on the home or main screen.  

If you do not have online access and are self insured, you need to obtain it to set up your own system.   

Let us cover a few of the notifications.   Remember – you need to make the settings at a level you feel comfortable with without becoming the adjuster on the file. 

Payments Over X$

One notification that you should have set up is a basic one for self insured claims data analysis.   When a payment is made over for instance $10,000, you should receive an email immediately.   

Most systems have that in place.  If not an email, then at least have the payments over $10,000 or the largest 10 payments made over the last 60 days right on the home screen.   

Remember, self insureds – the TPA is spending directly out of your bank account, so a large payment should be a notification to you to at least see what the payment entailed and on what file. 

Risk managers – you do not want to justify to a C-level manager why you did not review a large subtraction out of your budget.  

Reserves Over Y$

Rubber band with money self insured claims data and Card

Wikimedia Commons – Drew Friestedt

As with the payments, you need to know when the reserves have increased significantly on a certain file.  This is another one that when a certain amount is added to a file – for instance, and increase $25k in total, an email is sent to you immediately.  

This is an important aspect of self insureds claims data.  Why?  Usually, reserves are fed into your Loss Development Factor and the reserves are being increased to make some type of large payment.  

Litigation, Denial, Subrogation, Fines, Settlement, Hearings, Closing –  Flags

Any major development on the file should have a flag notification sent out or have it on your TPA’s home screen when you logon to see your self insureds claims data.   

The subrogation flag is one of the more interesting ones.  You can know if the TPAs claims adjuster is looking into the subrogation on the file that has third party involvement.  

The list of flags can be enormous.  The states a self insured operates in may dictate which one of these flags are more useful than others. 

Vendor Assignment 

This unique flag lets you know what vendor is being assigned by the TPA.  This cost-saving flag becomes very important when the TPA is using an internal company vendor such as a PBM or Rehab Nurses. 

Do Not Adjust The Files – Risk Manage Them

Computer Screen of self insured claims data Spreadsheet

Wikimedia Commons – Texas State Library and Archives Commission

Having too many flags set or having the reserve or paid values too low turns a Risk Manager into an adjuster.  You are paying your TPA to adjust the files – let them do their job. 

Manage the risk by going beyond your loss run – adjusting the claims can be an exercise in frustration. 

TPA Fees – All Should Be On A Self Insured Claims Data Cost Spreadsheet  

Make sure you know every penny your TPA is charging you for their services including the internal vendor assignment flag from the above heading.   

One can usually request a screen to be set up to show these or downloaded as an Excel (not CSV) Spreadsheet.  You need to know where the internal charges originate.  The TPA fees can be surprising yet informative self insured claims data. 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: self insurance Tagged With: bells and whistles, CSV, last 60 days, online access, spending directly out, Vendor Assignment

Workers Comp Carriers Fined For Late Reporting To Rate Bureaus?

October 8, 2020 By JL Risk Management Consultants

Surprising Number of Workers Comp Carriers Fined For Late Reporting 

The number of Workers Comp carriers fined for late reporting in 2018 and 2019 may surprise you.   The late reporting referred to in this article stems from insurance carriers habitually reporting the claims data (Total Incurred) late to the rate bureaus – think NCCI, WCIRB, and the independent rating bureaus. 

graphic zero number of workers comp carriers fined for late reporting

Public Use License – ivanovick solano

Are Workers Comp Carriers Fined For Never Reporting Data 

The Pennsylvania Department of Insurance fined Brickstreet/Highmark over $200,000 last year for highly inaccurate – basically never reporting certain insureds’ data.    

The reporting error sent the Pennsylvania Workers Comp rating system into a tailspin resulting in systemic premium overcharges.   I will save you having to read a long explanation of how not reporting data can cause employers to pay more in premium.

Pennsylvania has its own rating bureau – The PCRB.  The reporting errors were amplified as the PCRB has a smaller number of insureds than NCCI or the WCIRB.  The error was spread across a smaller data set. 

Over the years, workers comp carriers fined for inaccurately reporting data remains very rare. 

Other than that one instance noted above, carriers are rarely if ever fined for habitually reporting data late.  Reporting claims data late can have a disastrous effect on insureds’ Experience Modification Factors (Mods).    

See The Mod Effect heading below to see how late reporting can wreck an employer’s Mod (one of our clients).

NCCI Rule on Reporting Claims Data Timing 

The rule by NCCI (and most other rating bureaus) is: (paraphrased) 

  1. Data is initially valued 18 months after the policy inception date – the extra six months is for claim development
  2. The first (data) report is due 18 to 20 months after the policy inception date – 60 days for the carrier to report the 18-month data. 
  3. Subsequent reports for open, reopened, and newly arising claims are due in 12-month intervals, with up to a total of 10 report levels required.  30th month, 42nd month, etc. 

You can read more in this PDF file on Unit Statistical Reporting  The manual comes from NCCIs Annual Data Reporting Conference.  I try to attend every year if possible. 

Mod Effect – An Example

Formula of Workers Comp Carriers Fined on Black Board

Wikimedia Commons – alegri

One of our clients started using J&L’s services after they received what they thought was their final Mod for 2020.   The Mod was actually a Contingent Mod provided by their agent.   Their Mod was .91 which represents a relatively safe employer. 

The carrier reported late claims loss data after the employer received the first Mod. 

A basic Mod formula is Actual Losses / Expected Losses.   

The employer was expecting  343,000 / 376,923   = .91 Mod. 

The employer could bid on government projects as their Mod was below 1.0 – this requirement shows up quite often in RFPs presently. 

The carrier then late reports in payroll and losses after the next policy inception where the formula is now:

454,000 / 412,727 = 1.10.    

The employer then calls us to have J&L go through the Mod numbers.  We informed them that the carrier had reported their numbers late to the rating bureau.  

The now client employer asked are workers comp carriers fined for this situation?  I said no, almost never. 

 

 

©J&L Risk Management Inc Copyright Notice 

Filed Under: Insurance Carriers Tagged With: 12-month intervals, due 18 to 20 months after, PCRB, Pennsylvania, systemic premium overcharges

What is Earned But Not Reported (EBNR) – Employers Need to Know

October 1, 2020 By JL Risk Management Consultants

Earned But Not Reported Now A Factor With Premium Audits – Employers Be Wary

NCCI’s Barry Lipton, Senior Actuary published a post this morning that I read over three times to absorb the theory of the Earned But Not Reported (EBNR) hangover effect.   You can check out the post here at this link.   You should at least read the introduction and conclusions.

graph of 2010 recession earned but not reported

CNN – Public Use License

I had to take Barry’s great article and take it from a macro view to a micro view.  How will this affect the individual policyholder?  Agents need to take heed of this info for their insured clients. 

No, I am not beating up on premium auditors and premium audits.   I am beating up on the assumptions made after an employer receives a premium audit refund due to a downturn in their business.   

Carriers are examining their figures due to the downturn.   Employers should also review their figures. 

Yes, having a premium refund now has helped and will help employers survive until the main-street economy picks up speed – it already has picked up in certain areas and industries.  

Earned But Not Reported (EBNR) Definition

From the NCCI article – at the previous link

… our subject today is about a related issue—the accuracy and timeliness of the financial estimates carriers are required to make for the premium these audits generate.

This financial estimate, known as Earned but Not Reported premium (EBNR), is the premium counterpart to the better-known Incurred but Not Reported component of loss reserves (IBNR). 

This is a macro level definition – hang in there with me – this is going to make sense.   

Micro-level Definition of EBNR

Micro Earned But Not Reported Beads

Wikimedia Commons – Zach Dischner

Therefore, the written premium for that calendar period will look extra low since high-payroll estimates in the prior policy period are being corrected over and above the decline in actual insured policy payroll volume attributable to economic conditions—a double whammy, as two years of impacts are rolled into one. This affects both written and earned premium.

How Does Earned But Not Reported Affect An Employer? 

NCCI did not make this conclusion, I am making it.   Let us say that your business spikes once a full recovery takes place.  Look at the second chart in the article.  You can see the spike there.  

The resulting audit for the subsequent policy year should be a concern.   If at policy renewal, the recovery numbers – where you received the refund are used, then you are in for a sticker shock on the post-recovery policy period audit. 

Many carriers, (I assisted a few) processed premium refunds earlier this year.  My earlier “employer beware” warning results from this very situation.   

The carrier has returned a large amount of premium to your company.  Many states such as New Jersey and California ordered an immediate return of premium.  

When your business returns and you return your employees to work or hire new ones, your payroll may be much larger than your policy anticipated.  Agents take heed so that you avoid an angry insured when the post-recovery premium audit occurs in 2021 or later.  

Earlier Articles On Economic Slowdowns 

Running Water Earned But Not Reported in Green Background

Wikimedia Commons – Eli.berckovitz

Many articles published in this blog over the years warned if you have a business contraction, your policy renewal should reflect the reduction in payroll and should not be delayed until at the yearly premium audit.  

The article in the prior link is from 2008 and covers recession proofing your workers comp policies.  The article you are reading now should be looked at as recovery-proofing.  

Now, the opposite may be true for your company, you may have received an early premium refund or have received one at the audit.   That is great news.  Make sure that your next policy reflects any anticipated business improvements.  

Some businesses may not recover until late 2021 or 2022.   If you do not anticipate your business increasing until the second policy year, then remember to adjust the policy renewal figures in your recovery year.   

Waiting Until Premium Audit To Offset EBNR

If you wish to conservatively estimate your business recovery, then avoid the Earned But Not Reported sticker shock at premium audit.   Budget funds to pay the affected premium audit when your business fully recovers – good luck. 

 

 

©J&L Risk Management Inc Copyright Notice

 

Filed Under: Audit Preparation Tagged With: accuracy and timeliness, areas and industries, double whammy, EBNR, financial estimates, introduction and conclusions

Workers Comp Reserve Reduction Strategy – Critical Last Step

September 30, 2020 By JL Risk Management Consultants

Workers Comp Reserve Reduction Strategy – Do This Last Critical Step 

Many articles in this blog center around formulating and enacting your workers comp reserve reduction strategy.   We have heard from many article/blog readers -where the anticipated reserve reductions did not tabulate properly.   

picture steps to workers comp reserve reduction

Public Use License – Wikimedia – DanielZanetti

We heard from an agent today with the question – what happened – there was no movement in the workers comp reserves.   The time this hits the fan is when the Experience Modification Factor was published by the insureds respective rating bureau. 

The insured or their agent then contacts us about what happened after the reserves were negotiated down but the Total Incurred (Paid + Reserves) did not reduce one penny. 

Adjuster Relationship = Timely Workers Comp Reserve Reduction

My first out-of-the-box questions cover the article from last week on reserve reductions – click here.   The one question that I always add is – did you pull your Workers Comp reserves just before the UNISTAT Date?    

Workers Comp adjusters are overloaded at the end of a month.  DO NOT expect them to drop everything if you request a reserve reduction two days before the UNIT STAT Date.  

The working relationship with the adjuster becomes very important when you request a reserve reduction on a certain file or group of files.  

Your Reduction Request is Ranked 13 out of 13 – OMG!

Blue Puzzle Workers Comp reserve reduction on the floor

Wikimedia Commons – Jared Tarbell

The reduction will not occur- trust me.  If you want to know what claims adjuster is doing – check out the 13 duties of a workers comp adjuster that I originally wrote in 1994.   

Most TPAs and carriers want all the 15-and-60-day reserve increases cleared out by end of the month.   

Your reserve reduction or closing request is ranked 13th out of 13.  It is similar to ESPN’s Bottom  10 College Football Poll. 

So – if you are reading this, go back to the reserve reduction article last week, and then follow all the links from there on getting your reserve reductions through and reported to the rating bureau.  

For more info, please use the Search Box at the top right of any webpage – totally worth using it.

Self-Insureds – You Are In On This Too (A Little Secret)

Yes, you are not out of the Mod system, except you have a Loss Development Factor to contend with at comparably the same time as the UNITSTAT Date. 

Most of the LDF’s use the same timing as the Rating Bureaus and the UNISTAT Date.  You are obtaining an independent LDF – right? (Hope so -if not Use The Contact Us page on the website). 

Last Step to Your Workers Comp Reserve Reduction Strategy Is..

You must pull the Workers Comp Loss Run one more time to make sure the reductions you are anticipating are on the books before the UNIT STAT date kicks in.  Yes, self-insureds are included – obtain your TPAs loss run.   

The reserve increases or decreases must work their way across many desks (now virtual).  If you are dealing with large reserves, the request may have hung up somewhere in the process.   

As I have said repeatedly, online access to downloading your own loss runs is beyond important at this time in your Workers Comp reserve cycle.   Printing our on-demand loss runs helps insureds and self-insureds avoid having to request one and waiting for a response. 

The last step should be done approximately a week before the UNISTAT Date.   

Red Alert if.. (Star Trek reference)

Big Red Workers Comp reserve reduction Button

Wikimedia Commons – włodi

If the reserves are still at the same levels or the files did not close, you must drop everything and take care of the situation.   You have followed the reserves all year – push it over the finish line.   Email the adjuster with a follow-up call to see why no anticipated reserve reductions occurred on the files.  

Remember that you are dealing with #13 out of 13 adjuster duties – and if it is the end of the month, adjusters are totally overloaded. 

Do not wait until the last day of the month or the last day before the UNISTAT date.  You are going to be disappointed with the results.  Your Workers Comp reserve reduction strategy will be all for naught. 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Reserve Reduction Program Tagged With: ranked 13th out of 13, Star Trek reference, tabulate properly, totally overloaded, UNISTAT

How J&L Reduced Workers Comp Reserves $300,000 In One Month

September 24, 2020 By JL Risk Management Consultants

Animal Rescue Loss Run Analysis Reduced Workers Comp Reserves – Short Deadline

We reduced Workers Comp reserves for an Animal Rescue and Veterinary in 30 days by 300,000 was one of our most recent successes.   How do we do it?   Follow along – maybe you can do it for your company or client.

pic of puppy sleeping reduced workers comp reserves

Wikimedia Commons License – Eugene0126jp

Making available more funds to help save kittens and puppies felt great – using the below semi-secret method.   An agent contacted me to help her with a large client where their Experience Mod was going to incur a sky-high spike.  Yikes! 

Self-insureds can use the same techniques – the timing can be adjusted to whenever you have an LDF calculated for you.

The Method To The Madness – 10 Steps (Two Bonus) 

  1. Obtaining the correct loss runs – the agent and I could not obtain the correct loss runs for many weeks.  Three different versions of the claims loss run existed with different claims on them. 
  2. Online Access – I have been harping on having the claims reserves and notes access for over 25 years.   The agent and I were able to obtain an online account with the correct info.   You can print your own loss runs if you have an online account with the carrier.   We received this two weeks before the UNIT STAT date.
  3. Understand Your UNIT STAT Date.  You have to know what reserves peg to the Experience Mod and on what date.  Follow this link for an explanation of the UNIT STAT date.  So many end-of-year or end-of-policy-year reviews can be very worthless. 
  4. Understanding What To Leave In – What To Leave Out – many claim loss run review requests from employers and agents say – “Hey, let’s review them all” – the wrong method.   As a claims person for many years, reserves increases were sometimes caused after having to review a set of claims for an insured and/or agent.  Let some sleeping dogs lie (no pun intended), but which ones to pick and which ones to pass over? 
  5. These &^%$& Reserves Are Too High – the bane of many adjusters – the same as #4, but on an individual claims basis.  The comment will usually cause an adjuster to dig their heels in the ground and push back hard.   Threatening to bring up the reserving with their claims supervisor is not recommended. 
  6. Look For The Algorithms- if you have claims notes and reserve access, many claims departments have some type of tracking algorithm (analytics) that may point out over-reserving.   You are not going to find this info on just a claims loss run.  J&L has its own algorithm – it is called workers comp claims experience. 
  7.  Relationships, relationships, and relationships – the most important of these ten.   The agent had a working relationship of sorts with the claims adjuster.   Even though we were running out of time, the agent never challenged the claims adjuster.  <<very important point.   
  8. Employers and agents, do you know who is working on what files – no, not the name on the loss run – have you spoken with that adjuster – best by email.  See #7 – do not come out of the blue and make the request. 
  9.  Explain Your Goal – adjusters are goal setters and seekers – explain to them what you are doing by having the reserves reduced and the results you are seeking.  
  10. Pick The Top Three – a huge insured may want to pick five.   Workers Comp claims adjusters are short on time.  Make sure that you do not ask for 10 – 15 claims to be reviewed for reserve reductions.   That request will go to the bottom of the pile and then the UNISTAT Date will pass and your efforts to have reduced workers comp reserves will all be in vain. 
  11. Bonus – Show The Insured The Experience Mod Differences – calculate what the Mod would have looked like without the reduction.   This can be complicated – be careful. 
  12. Bonus #2 – Try to start the process at least 90 days before the UNISTAT Date.  Reserve reductions may have to go through a Claims VP, Manager, and Supervisor to approve reduced workers comp reserves.  Start early. 

The Results Of The Reduced Workers Comp Reserves

Sea Turtle reduced workers comp reserves under the sea

Wikimedia Commons – Brocken Inaglory

The final results will not be known until the UNIT STAT publish date.  The final results of the reduced workers comp reserves should be published in December of this year.  

Make sure that you convert the differences in #11 above to premium dollars if possible. Reduced workers comp reserves are great. The final effect on the premiums is even better.

 

 

©J&L Risk Management Inc Copyright Notice. 

Filed Under: Reserve Reduction Program Tagged With: goal setters and seekers, kittens and puppies, sky-high spike, tracking algorithm, UNIT STAT, Veterinary

Physical Premium Audits – COVID 19 Removed The Physical Part

September 24, 2020 By JL Risk Management Consultants

Will Today’s Hybrid Audits Ever Return to Physical Premium Audits?

First – let us define the three types of audits in this article – 

pic of coronavirus mask physical premium audits

Wikimedia – NetanelBacharSchwartz

Short Definitions

Hybrid -the records are usually reviewed offsite -technology has allowed much easier access to employer records without having a “physical presence” at the employers’ offices.   If the employer hires its own premium audit consultant, the audit is usually hybrid. 

Self-reporting audit– the employer submits their payroll and classification codes to their insurance carrier.   Spreadsheets are critical to the success of self-reporting audits.   This type of audit usually occurs with very small companies.  

Physical – the premium auditor physically visits the employer’s offices to review the records onsite.  Many states require physical premium audits if the premium or payroll amount reaches a minimum figure.    The auditor may request to take some of the records offsite – my opinion on records removal can be found here.

COVID-19 Lockdowns Changed Everything 

The first that I heard of employers not allowing any type of outside contact began in March and has not changed that much since then on who comes and goes at employers.  

Hybrid audits became very necessary in states such as California and New Jersey.  The Departments of Insurance required the carriers to process premium refunds due to furloughed employees and reclassified employees along with other requirements such as 90-day grace periods for premium payment.  

The Classification Code 8871 became very popular almost overnight.    The Telecommuter Class Code was extremely important for employees working from home on their computers. 

Three carriers and two agencies contacted J&L to obtain our opinion on how to process refunds to employers even though physical premium audits were placed on hold.   The answer was modified hybrid audits.

Hybrid premium audits came to the forefront over the last six months.  

My Predicted Change to Physical Premium Audits

In my opinion, physical premium audits will not be eliminated entirely and replaced with hybrid audits.  Premium audit disputes would spike over “the auditor does not know what we do here at our plant” or something similar. 

My predicted change is the Departments of Insurance and Rating Bureaus (NCCI, WCIRB, etc.) will increase the minimum requirements for physical premium audits to a higher level.  

How will this occur? The process has already started for insurance carriers and premium audit companies.  Check out this webinar today on premium audits. 

Child in medical mask physical premium audits during coronavirus pandemic

Wikimedia Commons – vperemen.com

Premium audit companies and insurance carrier premium audit departments have started using algorithms and analytics to choose the type of audit – from the webinar page – 

“The webinar will focus on how insurance carriers are integrating advanced analytics and machine learning to their premium audit process t

PRP results carriers are seeing the benefit of proactive risk mapping. 

Objective: Understand how analytics works and how carriers can integrate modeling into their premium audit process”. 

Physical premium audits will never be eliminated totally.  How premium audits are conducted post-COVID-19 will change in early 2021 and 2022.

©J&L Risk Management Inc Copyright Notice 

Filed Under: hybrid Tagged With: 90-day grace periods, agencies contacted, integrate modeling, New Jersey, proactive risk mapping

Hard Workers Comp Markets – The Silent Reasons Why

September 17, 2020 By JL Risk Management Consultants

Hard Workers Comp Markets – Two of the Reasons Not Discussed That Often

The hard workers comp markets usually occur when the suppliers (carriers) cut the supply of insurance to (demand) employers.   I have heard investment returns often discussed in many of the reinsurance webinars and articles – not so much in the workers comp insurance discussions.   

basic supply demand chart hard workers comp markets

Public Domain License

Those two areas are:

  • Investment returns
  • The stacked random variable introduction this year

Investment Returns Influence on Hard Workers Comp Markets

 Investment returns remain one of the drivers of the insurance markets.   The investment returns that carriers experience influences the rates they charge their insureds.  

Insurance carriers heavily prefer solid non-volatile investments such as deposit interest rates.   Even though the stock markets have recovered much of their losses the volatility remains extreme.   

The nations’ largest rating bureau NCCI – published a .83 combined ratio last year.   In a very roundabout way, this means the carriers are receiving a 17% return on premiums written.   That percentage indicates the market is healthy with much competition.  A soft market would likely be the result of such dramatic numbers.  

Stock Market Volatility and Extremely Low Interest Rates 

If one reads any of their mutual funds’ prospectus, many times right on the front page the mutual fund says – there is a chance of loss. 

Even though carriers had a 17% return on premium, the wild swings in the stock markets make most carriers very uneasy.   Carriers have that same chance of loss as an individual investor.   The 17% return can be lost in a few days. 

Insurance carriers prefer interest-bearing investments including bonds.   I just read the NC State Employees Credit Union investment returns on IRAs.  IRAs are considered permanent investments – the money stays there.   The rate of return was 0.76% (Wow!).   

The safety of interest-bearing investment is offset by the minuscule rates of return.   Bond markets do not look that great either.  

How do insurance carriers remove this volatility – by not underwriting all markets or class codes.  They can remove risk on the “other end” of their financial books.   Many insurance industry experts have almost unanimously said the markets are “tightening.”  

The tightening could be temporary.  Workers Comp carriers move very slowly back into a market or class code where they have pared back underwriting certain companies.  

New Random Number Variable – Heavy Effect on Workers Comp Hard Markets

I have attempted to not write articles on COVID-19 lately.  So many writers publish those articles every week.   The COVID-19 caused a random-number-variable stacking. 

Presumptions and Claims Handling 

Woman Doctor Hard workers comp markets with yellow mask on

Wikipedia – Agência Brasília

As of today, 17 states have passed COVID-19 presumption laws that make actuaries, underwriters, and claims handlers very uneasy.  

Many claims experts including myself have voiced their opinions of the need for presumption laws.  I wrote an article on that subject a few weeks ago.  Check it out.   The Workers Comp Occupational disease statutes have presumptions built into them.  

Regardless, they are law now and must be followed.  The COVID-19 is a stack-risk.  

COVID-19 introduces three random number variables to the risk equation:

  • COVID-19 increases the risk of an on-the-job occupational disease
  • The presumption laws may change the claim handling procedures for the investigation of COVID-19 claims. 
  • Our changing relationships with China – this is a subject for a later article. 

When you have actuaries, claims handlers, and especially underwriters nervous, the best way to remove some of the nervousness is by not underwriting every company that submits a workers comp app like the old days.   

The nervousness results in hard workers comp markets. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: hard market Tagged With: dramatic numbers, experience influences, mutual funds' prospectus, nervousness, solid non-volatile

Loss Cost Decrease Does Not Directly Result in Premium Decrease

September 17, 2020 By JL Risk Management Consultants

Loss Cost Decrease Question From Newsletter Reader

A newsletter reader recently asked this question after reading that their state recommended a Workers Comp Loss Cost decrease recently.   

Graph of loss cost decrease dog reaction times

Wikimedia Public Use – JLW87

If our state has a Loss Cost decrease does that mean we will pay less premium?   My answer to their email inquiry was “not necessarily.” 

I have written on this subject a few times over the last 12 years.  Loss Cost increase and decrease questions seem to one of the unexpected more popular questions since 2000.   

Many states have been very active in publishing Lost Cost information over the last two weeks.   Our HQ state (North Carolina) just recommended a 3.9% decrease.   

California’s WCIRB (Rating Bureau) refers to these rates as advisory pure premium rates.   The WCIRB has a great definition of advisory pure premium rates that can apply to Loss Costs:

California advisory pure premium rates reflect a projection of losses and loss adjustment expenses per $100 of payroll for each of the approximately 500 standard classifications used in California. The data used to calculate the pure premium rates proposed by the WCIRB are derived, in part, from aggregate financial data collected from insurers who have workers’ compensation underwriting and claims experience in California.

Loss Cost Multiplier Definition 

Insurance carriers very often publish and re-publish Loss Cost Multipliers.   Loss Cost Multipliers are sometimes published per insurance company as in this Kansas example or per each or certain classification codes

 Loss Cost Multiplier (LCM’s) definition – 

LCM’s are basically the insurance carrier’s deviation from the advisory loss costs that are published by NCCI or your state’s rating bureau.

The advisory loss costs are what each state has set for a Classification Code. Advisory loss costs do have a function. They are the basis for the Loss Cost Multipliers.

Loss Cost Decrease A Good Sign

If you would like to see what a decrease looks like check out this lengthy letter from the North Carolina Rate Bureau to The Insurance Commissioner (thanks WorkCompCentral.com) look like – here you go. 

Pages 11 – 15 show the actual rate charts.   This is an example.  Most states follow the same type of process to have the Lost Costs approved by the Insurance Commissioner.    

If a state recommends a Loss Cost reduction, does this mean that the companies in that state are safer?  Yes, but not necessarily.    

Huge Loss Cost and LCM Difference 

A huge Bamboo Tree Loss Cost decrease in the Forest

Wikimedia Commons – Stéfan Le Dû

One of the big differences between Loss Costs and LCMs is Insurance Commissioners have rejected, raised, or lowered the Loss Cost recommendations by NCCI or their own state’s rating bureau.   

I have yet to see an Insurance Commissioner reject a carrier’s LCM filings.   The rejections could have occurred, but I have yet to see one. 

Bottom Line

And the final answer is – Loss Cost decreases show a good trend for a state.  The carriers adjust their rates almost at will.   Please pull up your Workers Comp Dec Pages and review them before policy renewal and at the premium audit.   

You do read your Dec Pages – yes?  If not, please read or have someone in your company read them that oversees your funds. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: advisory rate Tagged With: actual rate charts, aggregate financial, increase and decrease questions, LCM filings, standard classifications

Premium Audit Payroll Figures More Critical Due To COVID-19

September 10, 2020 By JL Risk Management Consultants

Premium Audit Payroll Numbers Now More Important Than Ever

Why is the Workers Comp Premium Audit payroll accuracy more important in 2020?  Yes, the COVID-19 pandemic may reach into your premiums more than you or your company may have anticipated. 

picture of savings bond premium audit payroll figures

Copyright – National Archives

Let us look at the basic components of your Experience Modification Factor – the Worksheets you should be receiving from your agent or rating bureau.  

Basics of The Experience Modification Factor Formula

You do not have to figure it yourself – as the savings bond picture says – you may only need to understand how a heavy reduction in payroll can increase your Experience Mod.  

Experience Mods have a lookback period of three years.  The last policy year and associated claims will not show up anywhere in your Mod sheets – one of the basic rating rules. 

Yes, I do realize the Rating Bureaus are changing some of their rules to aid companies with the COVID-19 pandemic.  What I am covering will not change for the most part. 

For example: 

Policy renewal    January 1, 2022 – remember the workers comp rating algorithm is a delayed system.  

The 2021 policy and claims will not show up anywhere (could be the post-pandemic recovery period?).   

Payroll – these are from a worksheet I am currently reviewing and forecasting. 

Policy Dates    Payroll Claims – Total Incurred
1/1/2018 – 1/1/2019$ 2,634,000323,000
1/1/2019 – 1/1/2020$2,874,000292,500
1/1/2020 – 1/1/2021$450,000102,000

Unfortunately, the payroll had fallen – the class codes stayed the same- in other words, the company shrank but did not change during the pandemic. 

I will spare you cranking the formulas through with a ton of numbers in this article.   Think of higher payrolls being able to absorb the risk.    The premium audit payroll numbers are reported directly to the rating bureau.   

The $450,000 looks out of place.  Why?  Unless the employer had a very bad year the $102,000 in total incurred for the 2020 policy year looks high or were the payroll figures not reported properly?   

The Mod in this situation will likely tick up.  The $450,000 is not enough to cover the 102,000 in losses. 

Wait – I thought lower Premium Audit Payroll Figures saved my company premium 

Well, here is the “catch” on that one.   Many of our client employers bid on large private or governmental contracts. If the Mod is above 1.0, you are out in the cold.  I always advised the Risk Managers over these contracts to allow a little leeway.  Allowing an employer with a 1.0 Mod or higher to bid has become rarer each year.

Temp-to-perm employers now see the 1.0 requirement more often.   

Bottom Line – you want accurate numbers on your Mod sheets including the premium audit payroll info. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Workers Comp Payroll Audits Tagged With: $450, 000, cranking the formulas, delayed system, Pandemic, savings bond picture

Physical Therapy Study – Great Workers Comp Loss Control

September 10, 2020 By JL Risk Management Consultants

Physical Therapy Study – Early Use Means Lower Costs – WCRI 

A recent physical therapy study proves what we have been saying for over 30+ years.

picture army physical therapy study clinic

Public Domain

Two of the most-read read articles on this website consist of articles on therapy in general.   I did not think about why they were popular.  Two covered physical therapists while the other covered occupational therapy.     

Those three articles are: 

  • Occupational Therapy Can Be Worth The Expensive Costs
  • Is Physical Therapy Really Worth It? 
  • The Medical Provider The Injured Worker Sees The Most

The second article was my experience with a tough but great physical therapist when I crushed the bones in my left wrist (ouch!).   My recovery turned out excellent with full use of my left wrist – no surgery to place pins in my wrists.   

The physical therapist started aggressively exercising my wrist right out of the cast.  My hand swelled the first few times then the therapy started to really help me with my injury.  

My experience with therapy agrees totally with the recent WCRI study – early use of physical therapy saves costs.   One needs to remember that the physical therapist will be the medical provider the injured workers see the most for treatment. 

Bills, Bills, Bills 

Any adjuster or insurance carrier/TPA medical bill payer will tell you that other than prescriptions, physical therapists produce more bills than almost any provider. 

I used to look at that aspect as a burden on making sure the therapist did not exceed the treating physician’s prescription or the maximum number of treatments allowed under the state Workers Comp rules. 

I was keeping tabs on the Keys To Workers Comp Savings.  The savings provided by using physical therapy early was drowned out by the number of bills received from the therapist or clinic.

The bottom line – the number of billings were generated because therapists see the injured worker more often than any other medical provider.   

The WCRI Massive Physical Therapy Study Skinny

man doing physical therapy study on the other man

Wikimedia Commons – Free stajler

The study can be found here for purchase.

Some of the highlights are:  my comments in italics 

  • Later timing of PT initiation is associated with longer TD duration. On average, the number of TD weeks per claim was 58 percent longer for those with PT initiated more than 30 days postinjury and 24 percent longer for those with PT starting 15 to 30 days postinjury, compared with claims with PT within 3 days postinjury.  You snooze on physical therapy – you lose – plain and simple.
  • Workers whose PT treatment started more than 30 days postinjury were 46 and 47 percent more likely to receive opioid prescriptions and MRI, respectively, compared with those who had PT treatment initiated within 3 days of injury. The differences between PT after 30 days postinjury and PT within 3 days postinjury were 29 percent for pain management injections and 89 percent for low back surgeries.   Physical therapy remains a much cheaper option if used timely – notice the 30-day cutoff time
  • The average payment for all medical services received during the first year of treatment was lower for workers with early PT compared with those with late PT. For example, the average medical cost per claim for workers who had PT more than 30 days postinjury was 24 percent higher than for those who had PT within 3 days postinjury.  You can pay physical therapy now or pay a big claim later.

This study is based on nearly 26,000 LBP-only claims with more than seven days of lost time from 27 states, with injuries from October 1, 2015, through March 31, 2017, and detailed medical transactions up through March 31, 2018.

The 27 states are Arkansas, California, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Wisconsin.

The two previous paragraphs mean the study was comprehensive. 

©J&L Risk Management Inc Copyright Notice

Filed Under: Physical Therapy Tagged With: 30-day cutoff time, hand swelled, plain and simple, PT initiation

The Workers Comp Self Insurance Risk No One Talks About

September 3, 2020 By JL Risk Management Consultants

Workers Comp Self Insurance Risk – The $250,000 Repetitive Mega Claims

I sometimes forget to mention the self insurance side of Workers Comp Risk Management.   A certain Workers Comp self insurance risk conversation seldom occurs in voluntary insurance vs. self insurance decisions. 

picture of confidential self insured workers comp risk cover sheet

Public Use License – Library of Congress

Voluntary insurance may seem like an unused commodity when a premium is paid by a large company but little or no claims are ever filed.  Self insurance may seem like the best course of action to save on premiums.  

Most of the time, this angle on Workers Comp risk management may be very accurate.  The other side of the proverbial coin that seems to be ignored is when a company must face multiple mega claims. 

A mega claim as defined by the rating bureaus is any claim that has reached an incurred value of $3,000,000.    I consider any mega claim that reaches $250,000.  As I have often mentioned, $250,000 is an almost magic number where many file functions kick in at that level.  

Reinsurance is Not Catch-All Insurance 

Many self insureds have mentioned to me that “We are good, reinsurance kicks in at $250,000”.   This may be true.  With the COVID crisis and the lowering of company budgets – do you really have $250,000 to spend before the next level of insurance?  

If your company or organization has two or three claims that have reached the $250,000 level, the level of self-funding can be very tough in this economy.   Renewing your reinsurance policy may have a sharp premium increase surprise.

Why am I writing this article – because I have that situation right in front of me – where a medium-sized company is funding $750,000 for three claims out-of-pocket when their financials cannot support such a large budget output. 

Using a few risk management claim techniques,  some of the risks can be reduced – however, not all of the risk can be eliminated through loss control. 

Loss Limits and X-Mods 

Digital Machine workers comp self insurance risk paying with credit card

Wikimedia Commons – Hloom Templates

One aspect of voluntary insurance is Loss Limitations.  The loss limits control how much the X-Mods can be affected by one claim.  If you look on your Experience Modification Factor sheets, the # sign denotes that a loss limitation has occurred on a certain claim.  The # sign is usually located in the Total Incurred Column.

The loss limits can be very high – well beyond $250,000.   They function similarly to reinsurance if you think about it for a moment.  They cut your losses at a certain point. 

My point here is that at least there is a ceiling (in most states) how your X-Mod can be affected over the next four years.  That is not the case if you with Loss Development Factors (LDF).   Think of an LDF as a self insurance Mod. 

Voluntary Insurance and the Workers Comp Self Insurance Risk  

Voluntary insurance may seem much more expensive than the self insurance option – then again maybe not if you experience multiple large claims.  

Here is a very important point – the insurance carrier remains on the hook to handle and pay the benefits on multiple mega claims.  Your X-Mod increases, then again, it may be a cheaper option than paying $750,000 straight out of your budget as in the previous example. 

©J&L Risk Management Inc Copyright Notice

Filed Under: self insurance Tagged With: course of action, COVID crisis, proverbial coin, unused commodity

Workers Comp Android Apps – Journey Down The Rabbit Hole Again

September 3, 2020 By JL Risk Management Consultants

Workers Comp Android Apps – Giving It One Last Try 

Three years ago, a gentleman contacted me by phone.  He was very patient in explaining Workers Comp Android Apps were going to fade away as most smartphones can handle accessing the website directly.  An App was likely not going to assist in providing useful information.  

picture of workers comp android apps phones

Wikimedia Commons – License Google Samsung

I decided to reprise the annual review in 2019.   With the COVID-19 crisis, I thought, for some strange reason, a few apps may have been created and published on the Google Playstore.  I was partially correct.  

The Apple iTunes Store has never really had any workers comp apps.  I used to write an article on just the iTunes store that was short and deficient in any app analysis.  

Workers Comp Android Apps Found in 2020 Playstore 

I used the term Workers Compensation and Workers Compensation insurance as search terms.  The same list appeared with both search terms.    I installed each one and sampled each one – most required a Username and Password.

You can see the search results here. 

  • Lynx Workers’ Compensation Insurance Quotes  – a nationwide application process to secure workers’ compensation insurance by inputting basic info, need to know your current class codes to receive a quote.
  • New York State Insurance Fund (NYSIF) – Where Is My Check?  – this would be the one that I had thought all insurance carriers would provide as an app- saving the ubiquitous injured employee phone call.   Countless hours are spent still today looking up weekly TTD or TPD checks that have not yet arrived.  The Postal Service has experienced many delays since and due to the Coronavirus.  With adjusters working remotely, many carriers and TPAs should supply this app at a minimum. 
  • Sullivan on Workers Comp – Subscription Service for California – The standard for great California Workers Comp Law Info and Analysis – likely worth the monthly subscription price 
  • New York Workers Comp Board (NYSWCB) – Online Hearings – another great app – virtual Workers Comp hearings right on the smartphone.    
  • New York Workers Comp Insurance Fund (NYSIF)– Contact the Underwriter – this app provided the Underwriter information.  I could not tell if you could contact the underwriter on the app.  
Two Smartphones Workers Comp Android Apps in Pink background

Wikimedia Commons – pestoverde

Yes, smartphones can log directly into websites without using an app.  However, with just one click of a Google Android app, I can access solid information directly from the provider’s website.  

One can see that the NYSIF provided two well thought out apps – kudos to them.   

Even though the apps may not be used that often, the Workers Comp Android apps would function as great advertising to at least be available on the store – even though the apps may already be provided on the websites. 

Google, Apple, and any of the above apps have their copyrights preserved. 

©J&L Risk Management Inc Copyright Notice

 

Filed Under: Android, App Tagged With: Countless hours, log directly, NYSIF, Postal Service, username and password

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

Filed Under: Workers Comp Claims Guide Tagged With: 72 hours maximum, confrontational, flipbook guide, frowned up, recorded statements, three-point

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

Filed Under: workers comp claim Tagged With: Delaware Compensation, managerial reviews, mesothelioma, old dogs, Severe burns

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):

  1. An uninsured subcontractor was injured 
  2. 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

Filed Under: Ladder of Insurance Tagged With: convoluted, court of appeals, entrepreneurs, excepted out, outlawed

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.

picture of automated workers comp medical only claims alarm clock

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

Filed Under: Medical Only Claims Tagged With: mid-1980s, module, mundane, no-touch

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

Filed Under: Workers Comp System Tagged With: Bellwether, Big time bummer, COVID-19, Dave Bellusci, Unit Stat Date

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)

  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. 

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

  1. (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

Filed Under: AB 5, California Tagged With: app-based transportation, criminalizes impersonation, distilled for brevity, Dynamex, not integral

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 
    • Class Code 8871 Popular Now 
    • Premium Refunds From COVID Crisis 
    • California Adds Telecommuter Class Code
    • Furloughed Employees
  • 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:

  1. Coffee or bathroom breaks may be compensable – an office is an office if you designate it as one
  2. A safety plan needs to be in place for telecommuters
  3.  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.   

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Risk Management Tagged With: ergonomics, Furloughed, Furniture Corners, separate and distinct, SFM, technical drafting

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

(c) Public Domain – US Library of Congress

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.

 

©J&L Risk Management Inc Copyright Notice

Filed Under: workers comp policy Tagged With: DICEE, endorsement, exclusions, private citizens, War, Water damage

Talented Workers Comp Adjuster – Do They Have IT?

July 30, 2020 By JL Risk Management Consultants

The Talented Workers Comp Adjuster – What is IT? 

IT Applies To Any Line of Adjusters – Not Just WC 

Many discussions on a talented workers comp adjuster (or any insurance line) begin something similar to this.  Wow, we are searching everywhere for talented adjusters.

sight guide talented workers comp adjuster

Wikimedia Commons – Usper

I have attended many conferences where the presenters were worried about “brain and experience drain” not being replaced in the areas of safety, risk management, and especially claims.   

One presentation that stayed with me over the year came from the NWCDC Annual Conference session. The session consisted of one presenter with a moderator.  The presenter worked in HR for a midwestern regional carrier.   She delved into millennials and their psychological wants and needs.  The presentation was interesting.  The one-hour speech left out one thing – IT.

IT is not information technology.  

IT and the Talented Workers Comp Adjuster 

What does this talent consist of and how do you know if the adjuster is going to make it in a very challenging field?

Many years ago, when I worked with Lumbermen’s Underwriting Alliance (now defunct) in Boca Raton, FL, a sage experienced claims person (Irv Wicknick) presented three one-half day seminars on claims adjusting tips and traps. 

The Claims VP and Mr. Wicknick both said that IT was what made an adjuster stand out in a somewhat crowded field.  Thirty attendees brought up such attributes such as:

  • Timeliness
  • Attention to detail 
  • Empathy
  • Follow-through
  • Investigative ability  
  • Willing to work long hours and possibly weekends
  • And many others 

IT = The Talent to Adjust 

Most commonly talented workers comp adjuster is IT

Wikimedia Common – HSGTalents

Strikingly and memorably – Mr. Wicknick wrote IT on the presentation chalkboard.  He wrote nothing under it or beside the acronym just IT as representing the talented workers comp adjuster. 

Irv wrote IT is IT.  For an intense half-hour, all the attendees (adjuster trainees up to Claims Managers) asked what is IT?  We were told you will know IT when you see IT.   No definitions or attributes were given to the group on what was IT other than without IT, most adjusters will struggle with the normal heavy workload. 

You can see here the most common duties of an adjuster. 

Undefined IT 

Over the last 30 years since I heard that term, I always tried to look for IT when I moved up through the ranks and now as a consultant.  You cannot:

  • Train IT
  • Work longer hours to get IT
  • Memorize your claims manual to have IT 
  • Further your education to acquire IT – this one possibly moves you closer to IT 
  • Attain it through experience – you can hone IT with experience. 

IT vs. Talented Workers Comp Adjuster 

I have reviewed policies, claims, and the adjuster’s handy work on over 10,000 files, closer to 20,000.   I see IT in some files – usually the same adjusters.   

IT to me means “the ability to adjust and expeditiously close out files to the satisfaction of all parties involved in a claim.”  The term “all parties” covers many people and organizations in every claim – not a simple task.  

One Little Secret 

 IT or a talented workers comp adjuster can do workload

Wikimedia Commons – Colin

The one attribute to all adjusters in all lines of insurance is file documentation.  Being able to pick up a file and understand where it has been; where it is now; and where it is headed in a short amount of time remains the best way to give off “a good first impression.”   IT starts with a good first impression.  Two to three-line statutes look great in a file.

Caveat – over-documentation can cause the time management abilities of an adjuster to suffer greatly.  If one piles on the documentation, when can anything else be accomplished on the file? 

Always consult your claims manual – one of those IT things with a talented workers comp adjuster.  

 

©J&L Risk Management Inc Copyright Notice

 

Filed Under: claims adjuster Tagged With: chalkboard, IT, Lumbermen, moderator, one-hour speech, Underwriting

Workers Comp Adjuster Communications – Use 3-3-3 Rule For Efficiency

July 29, 2020 By JL Risk Management Consultants

Workers Comp Adjuster Communications vs. Productivity – 3-3-3 Rule Wins  

The 3-3-3 Rule(c) was invented by me in 1997 to help Workers Comp adjuster communications become more efficient and effective.   The rule still applies, even more, today in the age of Social Media. 

picture of shield with 333 rule for workers comp adjuster communications

Public Domain – Serbian Military

This rule can apply to so many business settings – beyond adjusters. 

What is my copyrighted 3-3-3 rule for workers comp adjuster communications?  Let us have a look. 

Why Did I Up With A Rule for Workers Comp Adjuster Communications? 

When I was a Director of Risk Management, the liability and workers’ comp adjusters that were great people – most of the time struggled to keep from drowning in their work.  

This naturally occurs in adjusting ranks over time.  Every adjuster had to face this sometimes-hidden tidal wave until it overtook them.   One very upset adjuster came with her supervisor to me to say, ” I am working hard as I can”.  The supervisor thought the adjuster spent too much time on letters, emails, and phone calls.  

The very effective 3-3-3 rule helps so many workers comp adjuster communications along with the liability adjusters.  However, this rule usually leaned more towards workers comp.  

The 3-3-3 rule may not fit all situations – think of it as more of a guide.  If any of the following info, goes against your claims manual – always go with your claims manual. 

Some adjusters were able to shave many minutes off their daily diaries and schedules. 

The 3-3-3 rule is:

  1. Three paragraphs in a letter or email
  2. Three lines of file documentation concerning any communication, and 
  3. The all-important – three minutes on a phone call. 

#1 Three Paragraphs

Some adjusters were drowning in their letter or email writing.  Why?   Being overly thorough, they may spend 1.5 hours on a letter that should have taken a few minutes.  Many insurance carriers and TPA’s have form letters that can cut this time down.   

The three paragraphs of the one-page letter are:

  1. Introduction – who you are and why you are contacting the addressee
  2. What you want to accomplish with the email or letter – what you want from the addressee
  3. Any follow-up timelines and a proper thank you or another nicety.

#2 Three Lines of Documentation in File Notes 

Work files of workers comp adjuster communications can be easily understood

Wikimedia Commons – Ragesoss

File documentation that drones on and on will never be read by anyone.  Twenty seconds after starting to read notes, you will begin to lose people.  If you feel that you need to document more then do it.   

Remember, this is only for documenting a phone call, email, or letter you received and read -always think workers comp or liability adjuster communications.  The three lines should cover:

  1.  Who – who did you contact or vice-versa? 
  2. Why the contact was made?
  3. What are you going to do with the info you learned?

#3 Three Minutes On the Phone 

I drove my supervisors and manager crazy on this one.  Being from the Southwestern US, I stayed on the phone for too long.   That was something ingrained in me that took forever to break that bad habit.  

Spending too long on the phone was one of my liabilities.   If I had to do it over again, this is one rule that I would have adhered to more closely.  

One can break #3 into three components (3 is the theme)

  1. Introductions – 30 seconds 
  2. What the person wants from you or what you want from the person – 1.5 minutes 
  3. What each of you will do with the info exchanged in the future and goodbye niceties.  – 1 minute

One can be flexible, but three to four minutes should take care of a large percentage of workers comp adjuster communications by phone.  #2 above becomes much easier to document if you follow the phone call rule. 

#4 – Bonus – Nobody’s Perfect 

Remember these are efficiency guidelines.  I would never recommend these as supervisory edicts.   For example, I am very bad at staying on phone calls that go stale after a few minutes.  If I remember #3, it makes me cover the needed points and to go on to the next task. 

#5 – Double Bonus – More Than Just Workers Comp Adjuster Communications 

 A job of workers comp adjuster communications and balance workloads

Wikimedia Commons – Quinn Dombrowski

This advice works well in many settings, not just WC or insurance.  The proverbial “other side of the coin” is avoiding coming off as rude and abrupt.  A balancing act for workers comp adjuster communications is in order.  

(c) 3-3-3 Rule Copyright J&L Risk Mgmt Consultants, Inc 

 

©J&L Risk Management Inc Copyright Notice

 

Filed Under: Communications Tagged With: addressee, documentation, efficient and effective, ingrained, social media, tidal

Most Reclassified Class Code – Which One Topped NCCI List For 2019?

July 23, 2020 By JL Risk Management Consultants

Reclassified Class Code During 2019 Inspections – Which Code Changed The Most? 

NCCI recently released a quick report on the most reclassified class code for 2019.  We have seen this class code very often in the last five years.  Which was one was it? 

picture of convenience store reclassified class code NCCI

Wikimedia Commons – Mbrickn

The most reclassified class code for 2018 can be found in an article I wrote earlier.   That Classification Code was 9015 –  Building or Property Management—All Other Employees. 

We received many questions on that reclassification.  Some companies, consultants, and other workers comp experts were a little confused.  We answered them by going over the article.   Check that one out.  The link is in the above paragraph.  

The most reclassified class code for 2018 – 2019 was 8006 – the 7-11 QuikTrip code but not for all 7-11’s or QuikTrip’s.   The exact NCCI Class Code moniker is 8006 – Gasoline Station – Self-Service and Convenience/Grocery Retail. 

Let’s not cover the whole class code.  I sometimes will provide the whole Class Code page – instead, we will concentrate on which codes were assigned in place of 8006.  

NCCI Governing Class Code Definition

One of the most popular questions that we have received in our 24+ years of business is

“Why is our business rated under one classification code.”    The answer from the article is:

The governing code, as defined in NCCI’s Basic Manual for Workers Compensation and Employers Liability Insurance (Basic Manual) Rule 1-B-5, is the basic classification at a specific job or location (other than a standard exception code) that produces the greatest amount of payroll. If a change to a policyholder’s governing class code occurs (as documented on an NCCI Inspection & Classification Report), then the governing code is considered reclassified.

The other one is – wait, we have had Class Code 8810 Clerical/Administrative reclassified the most in our business.  The article was referring to the Governing Class Code.

Code 8006 – Which Class Code Was Substituted?

Employers reclassified class code substitute

Wikimedia Commons – https://pixabay.com/en/users

The answer would be these codes were substituted for 8006.   NCCI was kind enough to share three different Class Codes.   They are:

  • 8033 Store – Meat and Grocery, and Provision Combined – Retail NOC – as a side note look very closely when your business is rated under a NOC (Not Otherwise Classified) operation – Check the 10 Red Flags Article for clarification
  • 9083 – Restaurant – Fast Food
  • 8017 – Store – Retail NOC

I will not cover the exact specifications within each reclassified class code.  Please read the NCCI article. 

A quick summary of why the codes were changed: 

  • 8033 – handling of fresh meats 
  • 9083 – sales receipts for the food and beverage service exceeded 50% of the overall sales.
  •  8017 – did not sell a variety of items that are typically sold at a convenience or grocery store or kiosk operations that sold prepackaged snacks, sandwiches, and beverages.  

The 8017 Class Code has created many lively debates over the past few years as this code is very interrelated with so many other reclassified class codes.  

If any of this seemed confusing or if you disagree, please comment below.  We would love to hear any questions on the Reclassified Class Code 8006 at any time. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: classification code Tagged With: Grocery, moniker is 8006, NOC, QuikTrip, Reclassified

IRS Dirty Dozen List No Longer Includes Offshore Micro Captives – Really?

July 22, 2020 By JL Risk Management Consultants

Offshore Micro Captives Dropped Off IRS Dirty Dozen List – Why? 

Over the weekend, I was combing through my workers’ comp reading list.  I almost dropped my laptop when I saw the headline that Offshore Micro Captives were not named to the IRS Dirty Dozen list. 

Picture of IRS Dirty Dozen List Eggs

Wikimedia Commons – Ariel Palmon

For context, I had written these articles that I suggest you read now or in the future to see how bad the offshore micro captive situation has become in just three short years.   Follow the links in this article to see what occurred over the last 15 years in this little corner of insurance. 

The IRS Dirty Dozen originates with the US Treasury Department listing what they found to be the main vehicles of tax evasion that possessed fraud, abuse, etc.   

What Is A Micro Captive?

The IRS section 831(b) article shows that micro captives are/were a good vehicle to start a small insurance company.  I learned about them in the insurance press and from going to the CICA conference in Tucson, AZ in 2010.  No one mentioned the IRS Dirty Dozen list in 2011- at the CICA Conference.

A PDF file produced by the IRS in 2016 showed what constitutes a legal offshore micro captive.   The passage below is from that PDF file. 

The main advantage of an offshore micro captive or any captive is paying taxes only on the investment income. 

The Department of the Treasury (“Treasury Department”) and the Internal Revenue Service (the “IRS”) are aware of a type of transaction, described below, in which a taxpayer attempts to reduce the aggregate taxable income of the taxpayer, related persons, or both, using contracts that the parties treat as insurance contracts and a related company that the parties treat as a captive insurance company. Each entity that the parties treat as an insured entity under the contracts claims deductions for premiums for insurance coverage. The related company that the parties treat as a
captive insurance company elects under § 831(b) of the Internal Revenue Code (the “Code”) to be taxed only on investment income and therefore excludes the payments directly or indirectly received under the contracts from its taxable income. The manner in which the contracts are interpreted, administered, and applied is inconsistent with
arm’s length transactions and sound business practices.  

Check out the last sentence in italics.   The 16-page document may be a long read.  If you are an employer considering an attempt to start an offshore captive, the IRS spells out how to avoid any micro captive from becoming an IRS dirty dozen list company.   

The actual dozen can be found in the last section of this article.  

What Took Micro Captives Off the IRS Dirty Dozen List? 

Micro plants IRS Dirty Dozen with growing seeds

Wikimedia Commons – Sundeep Damirekula

I decided to check further into why micro captives were removed from the list.   The results of my search were amazing.   Micro captives were not arbitrarily removed from the list.   According to an article I read over the weekend, the IRS worked hard on making the micro captives pony-up back taxes. 

IRS Sends Out Settlement Letter to 80% of Micro Captives = Removal From IRS Dirty Dozen List 

The IRS decided to examine a large number of micro captives by:

  • Creating 12 (wow!) teams to end abusive (in their opinion) tax shelters 
  • Using the recent captive and micro captive adverse Federal Court decisions as a basis 
    • Three wins by IRS 
    • No wins for the captive industry
    • The last one of the three Federal Court decisions said that no losses were paid, well, so much for good risk management and safety practices. 

The IRS sent out over 200 letters recently offering settlements to micro captives being audited by the IRS.   Eighty percent accepted the settlements.

What Changed On The IRS Dirty Dozen List?

WASHINGTON — The Internal Revenue Service today announced its annual “Dirty Dozen” list of tax scams with a special emphasis on aggressive and evolving schemes related to coronavirus tax relief, including Economic Impact Payments.

This year, the Dirty Dozen focuses on scams that target taxpayers. The criminals behind these bogus schemes view everyone as potentially easy prey. The IRS urges everyone to be on guard all the time and look out for others in their lives.

Old Picture of IRS Dirty Dozen doing Tax

Wikimedia Commons – Underwood & Underwood

“Tax scams tend to rise during tax season or during times of crisis, and scam artists are using pandemic to try stealing money and information from honest taxpayers,” said IRS Commissioner Chuck Rettig. “The IRS provides the Dirty Dozen list to help raise awareness about common scams that fraudsters use to target people. We urge people to watch out for these scams. The IRS is doing its part to protect Americans. We will relentlessly pursue criminals trying to steal your money or sensitive personal financial information.”

Taxpayers are encouraged to review the list in a special section on IRS.gov and be on the lookout for these scams throughout the year. Taxpayers should also remember that they are legally responsible for what is on their tax return even if it is prepared by someone else. Consumers can help protect themselves by choosing a reputable tax preparer.

The IRS urges taxpayers to refrain from engaging potential scammers online or on the phone. The IRS plans to unveil a similar list of enforcement and compliance priorities this year as well.

An upcoming series of press releases will emphasize the illegal schemes and techniques businesses and individuals use to avoid paying their lawful tax liability. Topics will include such scams as abusive micro captives and fraudulent conservation easements.

 

 “IRS Dirty Dozen List” scams for 2020 – Abusive Tax Shelters Removed

Phishing:

Signage of Taxes office IRS Dirty Dozen at the side floor

Wikimedia Commons – MarkBuckawicki

Taxpayers should be alert to potential fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a tax bill, refund or Economic Impact Payments. Don’t click on links claiming to be from the IRS. Be wary of emails and websites − they may be nothing more than scams to steal personal information.

IRS Criminal Investigation has seen a tremendous increase in phishing schemes utilizing emails, letters, texts and links. These phishing schemes are using keywords such as “coronavirus,” “COVID-19” and “Stimulus” in various ways.

These schemes are blasted to large numbers of people in an effort to get personal identifying information or financial account information, including account numbers and passwords. Most of these new schemes are actively playing on the fear and unknown of the virus and the stimulus payments. (For more see IR-2020-115, IRS warns against COVID-19 fraud; other financial schemes.)

Fake Charities:

Criminals frequently exploit natural disasters and other situations such as the current COVID-19 pandemic by setting up fake charities to steal from well-intentioned people trying to help in times of need. Fake charity scams generally rise during times like these.

Fraudulent schemes normally start with unsolicited contact by telephone, text, social media, e-mail or in-person using a variety of tactics. Bogus websites use names similar to legitimate charities to trick people to send money or provide personal financial information. They may even claim to be working for or on behalf of the IRS to help victims file casualty loss claims and get tax refunds.

Taxpayers should be particularly wary of charities with names like nationally known organizations. Legitimate charities will provide their Employer Identification Number (EIN), if requested, which can be used to verify their legitimacy. Taxpayers can find legitimate and qualified charities with the search tool on IRS.gov.

Threatening Impersonator Phone Calls:

Old Yellow Telephone IRS Dirty Dozen above to the Xerox machine

Wikimedia Commons – Billy Brown

IRS impersonation scams come in many forms. A common one remains bogus threatening phone calls from a criminal claiming to be with the IRS. The scammer attempts to instill fear and urgency in the potential victim. In fact, the IRS will never threaten a taxpayer or surprise him or her with a demand for immediate payment.

Phone scams or “vishing” (voice phishing) pose a major threat. Scam phone calls, including those threatening arrest, deportation or license revocation if the victim doesn’t pay a bogus tax bill, are reported year-round. These calls often take the form of a “robocall” (a text-to-speech recorded message with instructions for returning the call).

The IRS will never demand immediate payment, threaten, ask for financial information over the phone, or call about an unexpected refund or Economic Impact Payment. Taxpayers should contact the real IRS if they worry about having a tax problem.

Social Media Scams:

Taxpayers need to protect themselves against social media scams, which frequently use events like COVID-19 to try tricking people. Social media enables anyone to share information with anyone else on the Internet. Scammers use that information as ammunition for a wide variety of scams. These include emails where scammers impersonate someone’s family, friends or co-workers.

Social media scams have also led to tax-related identity theft. The basic element of social media scams is convincing a potential victim that he or she is dealing with a person close to them that they trust via email, text or social media messaging.

Using personal information, a scammer may email a potential victim and include a link to something of interest to the recipient which contains malware intended to commit more crimes. Scammers also infiltrate their victim’s emails and cell phones to go after their friends and family with fake emails that appear to be real and text messages soliciting, for example, small donations to fake charities that are appealing to the victims.

EIP or Refund Theft:

Face masks IRS Dirty Dozen in Green color

Wikimedia Commons – nursetogether.com

The IRS has made great strides against refund fraud and theft in recent years, but they remain an ongoing threat. Criminals this year also turned their attention to stealing Economic Impact Payments as provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Much of this stems from identity theft whereby criminals file false tax returns or supply other bogus information to the IRS to divert refunds to wrong addresses or bank accounts.

The IRS recently warned nursing homes and other care facilities that Economic Impact Payments generally belong to the recipients, not the organizations providing the care. This came following concerns that people and businesses may be taking advantage of vulnerable populations who received the payments. These payments do not count as a resource for determining eligibility for Medicaid and other federal programs They also do not count as income in determining eligibility for these programs. See IR-2020-121, IRS alert: Economic Impact Payments belong to recipient, not nursing homes or care facilities for more.

Taxpayers can consult the Coronavirus Tax Relief page of IRS.gov for assistance in getting their EIPs. Anyone who believes they may be a victim of identity theft should consult the Taxpayer Guide to Identity Theft on IRS.gov.

Senior Fraud:

Old couple IRS Dirty Dozen sitting on the outside chair

Wikimedia Commons – Candida Performa

Senior citizens and those who care about them need to be on alert for tax scams targeting older Americans. The IRS recognizes the pervasiveness of fraud targeting older Americans along with the Department of Justice and FBI, the Federal Trade Commission, the Consumer Financial Protection Bureau (CFPB), among others.

Seniors are more likely to be targeted and victimized by scammers than other segments of society. Financial abuse of seniors is a problem among personal and professional relationships. Anecdotal evidence across professional services indicates that elder fraud goes down substantially when the service provider knows a trusted friend or family member is taking an interest in the senior’s affairs.

Older Americans are becoming more comfortable with evolving technologies, such as social media. Unfortunately, that gives scammers another means of taking advantage. Phishing scams linked to Covid-19 have been a major threat this filing season. Seniors need to be alert for a continuing surge of fake emails, text messages, websites and social media attempts to steal personal information.

Scams targeting non-English speakers:

IRS impersonators and other scammers also target groups with limited English proficiency. These scams are often threatening in nature. Some scams also target those potentially receiving an Economic Impact Payment and request personal or financial information from the taxpayer.

Phone scams pose a major threat to people with limited access to information, including individuals not entirely comfortable with the English language. These calls frequently take the form of a “robocall” (a text-to-speech recorded message with instructions for returning the call), but in some cases may be made by a real person. These con artists may have some of the taxpayer’s information, including their address, the last four digits of their Social Security number or other personal details – making the phone calls seem more legitimate.

A common one remains the IRS impersonation scam where a taxpayer receives a telephone call threatening jail time, deportation or revocation of a driver’s license from someone claiming to be with the IRS. Taxpayers who are recent immigrants often are the most vulnerable and should ignore these threats and not engage the scammers.

Vector Icon of Tax IRS Dirty Dozen Sacks of Dollars

Wikimedia Commons – 401 (K) 2012

Unscrupulous Return Preparers:

Selecting the right return preparer is important. They are entrusted with a taxpayer’s sensitive personal data. Most tax professionals provide honest, high-quality service, but dishonest preparers pop up every filing season committing fraud, harming innocent taxpayers or talking taxpayers into doing illegal things they regret later.

Taxpayers should avoid so-called “ghost” preparers who expose their clients to potentially serious filing mistakes as well as possible tax fraud and risk of losing their refunds. With many tax professionals impacted by COVID-19 and their offices potentially closed, taxpayers should take particular care in selecting a credible tax preparer.

Ghost preparers don’t sign the tax returns they prepare. They may print the tax return and tell the taxpayer to sign and mail it to the IRS. For e-filed returns, the ghost preparer will prepare but not digitally sign as the paid preparer. By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a Preparer Tax Identification Number (PTIN). Paid preparers must sign and include their PTIN on returns.

Unscrupulous preparers may also target those without a filing requirement and may or may not be due a refund. They promise inflated refunds by claiming fake tax credits, including education credits, the Earned Income Tax Credit (EITC) and others. Taxpayers should avoid preparers who ask them to sign a blank return, promise a big refund before looking at the taxpayer’s records or charge fees based on a percentage of the refund.

Taxpayers are ultimately responsible for the accuracy of their tax return, regardless of who prepares it. Taxpayers can go to a special page on IRS.gov for tips on choosing a preparer.

Offer in Compromise Mills:

Taxpayers need to wary of misleading tax debt resolution companies that can exaggerate chances to settle tax debts for “pennies on the dollar” through an Offer in Compromise (OIC). These offers are available for taxpayers who meet very specific criteria under law to qualify for reducing their tax bill. But unscrupulous companies oversell the program to unqualified candidates so they can collect a hefty fee from taxpayers already struggling with debt.

These scams are commonly called OIC “mills,” which cast a wide net for taxpayers, charge them pricey fees and churn out applications for a program they’re unlikely to qualify for. Although the OIC program helps thousands of taxpayers each year reduce their tax debt, not everyone qualifies for an OIC. In Fiscal Year 2019, there were 54,000 OICs submitted to the IRS. The agency accepted 18,000 of them.

Individual taxpayers can use the free online Offer in Compromise Pre-Qualifier tool to see if they qualify. The simple tool allows taxpayers to confirm eligibility and provides an estimated offer amount. Taxpayers can apply for an OIC without third-party representation; but the IRS reminds taxpayers that if they need help, they should be cautious about whom they hire.

Fake Payments with Repayment Demands:

Fake coins IRS Dirty Dozen forms in the rock

Wikimedia Commons – Chris 73

Criminals are always finding new ways to trick taxpayers into believing their scam including putting a bogus refund into the taxpayer’s actual bank account. Here’s how the scam works:

A con artist steals or obtains a taxpayer’s personal data including Social Security number or Individual Taxpayer Identification Number (ITIN) and bank account information. The scammer files a bogus tax return and has the refund deposited into the taxpayer’s checking or savings account. Once the direct deposit hits the taxpayer’s bank account, the fraudster places a call to them, posing as an IRS employee. The taxpayer is told that there’s been an error and that the IRS needs the money returned immediately or penalties and interest will result. The taxpayer is told to buy specific gift cards for the amount of the refund.

The IRS will never demand payment by a specific method. There are many payment options available to taxpayers and there’s also a process through which taxpayers have the right to question the amount of tax we say they owe. Anytime a taxpayer receives an unexpected refund and a call from us out of the blue demanding a refund repayment, they should reach out to their banking institution and to the IRS.

Payroll and HR Scams:

Tax professionals, employers and taxpayers need to be on guard against phishing designed to steal Form W-2s and other tax information. These are Business Email Compromise (BEC) or Business Email Spoofing (BES). This is particularly true with many businesses closed and their employees working from home due to COVID-19. Currently, two of the most common types of these scams are the gift card scam and the direct deposit scam.

In the gift card scam, a compromised email account is often used to send a request to purchase gift cards in various denominations. In the direct deposit scheme, the fraudster may have access to the victim’s email account (also known as an email account compromise or “EAC”). They may also impersonate the potential victim to have the organization change the employee’s direct deposit information to reroute their deposit to an account the fraudster controls.

BEC/BES scams have used a variety of ploys to include requests for wire transfers, payment of fake invoices as well as others. In recent years, the IRS has observed variations of these scams where fake IRS documents are used in to lend legitimacy to the bogus request. For example, a fraudster may attempt a fake invoice scheme and use what appears to be a legitimate IRS document to help convince the victim.

The Direct Deposit and other BEC/BES variations should be forwarded to the Federal Bureau of Investigation Internet Crime Complaint Center (IC3) where a complaint can be filed. The IRS requests that Form W-2 scams be reported to: [email protected] (Subject: W-2 Scam).

Ransomware:

One hand IRS Dirty Dozen typing on Computer Keyboard

Wikimedia Commons – MoD

This is a growing cybercrime. Ransomware is malware targeting human and technical weaknesses to infect a potential victim’s computer, network or server. Malware is a form of invasive software that is often frequently inadvertently downloaded by the user. Once downloaded, it tracks keystrokes and other computer activity. Once infected, ransomware looks for and locks critical or sensitive data with its own encryption. In some cases, entire computer networks can be adversely impacted.

Victims generally aren’t aware of the attack until they try to access their data, or they receive a ransom request in the form of a pop-up window. These criminals don’t want to be traced so they frequently use anonymous messaging platforms and demand payment in virtual currency such as Bitcoin.

Cybercriminals might use a phishing email to trick a potential victim into opening a link or attachment containing the ransomware. These may include email solicitations to support a fake COVID-19 charity. Cybercriminals also look for system vulnerabilities where human error is not needed to deliver their malware.

The IRS and its Security Summit partners have advised tax professionals and taxpayers to use the free, multi-factor authentication feature being offered on tax preparation software products. Use of the multi-factor authentication feature is a free and easy way to protect clients and practitioners’ offices from data thefts. Tax software providers also offer free multi-factor authentication protections on their Do-It-Yourself products for taxpayers.

–I will update this article if the IRS Dirty Dozen list is updated.

 

©J&L Risk Management Inc Copyright Notice

Filed Under: IRS, micro-captive Tagged With: CICA, cybercrime, fraud, fraudster, Malware, offshore, relentlessly, Spoofing, Stimulus, Tucson

Workers Comp Premium Refunds Due To COVID Crisis

July 16, 2020 By JL Risk Management Consultants

Carriers Providing Workers Comp Premium Refunds Due To Coronavirus Shutdowns?

One of the most common questions we received since March from employers – Are carriers providing Workers Comp premium refunds due to the COVID crisis?  Is there a formula to know how much we are receiving?  Are states mandating carriers to provide refunds?  When should we expect a refund? 

 

workers comp premium refunds coronavirus picture

Wikimedia Commons Felipe Esquivel Reed

My answer to almost all the questions was – it depends.  We assisted three different carriers and two captives with providing refunds over the last few weeks/months.   I will answer each of the questions from the first paragraph. 

Please remember that I did not read every states’ rules on any COVID-19 crisis premium adjustments.  

Carriers Providing Workers Comp Premium Refunds? 

Yes, some carriers provided refunds to their insureds.  If the employers provided records showing that: 

  • Payroll was significantly reduced
  • Job duties changed – for example from a manufacturing job to a telecommuter job 
  • Employees were kept on payroll even though no work was performed 
  • Business closure 

Unless I am mistaken, most carriers wanted some type of records showing a payroll or job classification change before finalizing any refunds or credits.  

Formula For The Amount of the Premium Refund?

No, there was no set formula that I have seen to date.  I think the states left the process to the carrier.  Some states required a spreadsheet to show what each employer in their state received back from the carrier.  

Are States Mandating That Carriers Provide Refunds? 

Not all.  Many employers did not suffer a downturn in payroll and did not change their employee’s jobs.  California Insurance Commissioner Lara mandated a refund if one was owed.    Most of the Insurance Commissions asked or required that insurers be flexible during these unprecedented times.   

When Should We Expect Our Refund or Credit?

Tower of Workers Comp Premium Refunds used books

Wikimedia Commons – Jorge Royan

That is a tough question. To speed up the process, if you have not heard from your carrier or agent, organize your records, and contact your agent pronto.  Use emails for documentation purposes.

Most worker’s comp carriers have a COVID-19 contact page.  I know it is a tough time to do this – but good records are going to help your company.  

Excel spreadsheets are beyond critical for the organization of your records.   

Do not wait to hear if you have not heard from your Workers Comp carrier by now.   Most are very busy processing payroll and job change premium reductions.  

What Should We Do Right Now? 

Be proactive.  See the last section for beginning the process to obtain your workers comp premium refunds.  Reach out to your carrier or agent.  

 

©J&L Risk Management Inc Copyright Notice

Filed Under: workers comp audit Tagged With: coronavirus, pronto, refunds, telecommuter, unprecedented

IRS Workers Comp Rules – Two Payment Red Flags To Avoid

July 16, 2020 By JL Risk Management Consultants

IRS Workers Comp Rules – Pay Attention To These Three Closely 

Every year near the personal tax filing deadline, we receive questions on IRS Workers Comp rules.  This year was no different with the COVID-extended deadline of July 15th.  I decided to cover the one IRS Workers Comp Rule that I cover every year plus two quirky yet costly tax situations to avoid if you are receiving workers comp benefits (medical or indemnity). 

picture reviewing irs workers comp rules

Wikimedia Commons – Harland Quarrington

I was reading a great tax book, Jeffrey Schnepper’s How To Pay Zero Taxes over the last week.  I noticed that his book covered two other IRS “no-nos” on filing taxes with workers comp benefit payments. 

The first one is one that almost everyone knows – the other two are ones that should be followed closely.  After all, who wants to run afoul of the IRS? 

Are Workers Comp Benefits Taxable? 

In almost all cases, WC benefits are non-tax items.  You are receiving 2/3 of your average weekly wage.   If Worker Comp benefits were taxable, then your “take-home-pay” would be less than 50% of what you were previously earning in your job.  

Before signing any worker’s comp agreements from the insurance carrier, be very sure of the Average Weekly Wage that appears on the form.  Check your W-2’s from last year and your current paycheck stubs.  

If something looks amiss, email the claims adjuster to make sure your Average Weekly Wage figure is correct. 

Supplemental Payments From Your Employer – An Indirect IRS Workers Comp Rule

When I was reading Schnepper’s tax book, I said, of course, the supplemental payments are not workers comp.  If no one explains that to the injured employee, they could end up owing a large tax bill.   This would not be the goal of helping an injured employee while out of work. 

Some governmental agencies such as public schools and other types of employers decide to “cover the income gap” by paying supplemental benefits to bring the injured employee up to 100% of their pay.  

I have disagreed with doing this for years as supplemental payments may remove the motivation to return to work.  I have written a few articles on this subject and include these payments in many presentations.  

If an employer decides to offer supplemental payments, withholding taxes should apply the same as if the employee was presently working. 

If the employer decides to not withhold taxes, then the injured employee could have a large tax burden.   The burden would defeat the purpose.  

Medical and Health Savings Accounts – The Hidden IRS Workers Comp Rule 

Doctor showing IRS Workers Comp Rules instruction on the computer

Wikimedia Commons – Pexels

The rule comes from deep in the Schnepper tax book.   If an injured employee has workers’ comp medical bills that have been or will be paid by the worker’s comp insurance carrier, these cannot be turned in to a Medical Savings Account or a Health Saving Account. 

Doing so would be effectively “double-dipping” from two different benefit accounts.   The IRS could disallow the Health Savings Account resulting in a huge tax bill

Who would have thought about that IRS workers comp rule? 

 

©J&L Risk Management Inc Copyright Notice 

Filed Under: IRS Tagged With: double-dipping, GAP, paycheck stubs, Schnepper, Supplemental, taxable

Workers Comp Email – Five Best Practices To Avoid Trouble Later

July 9, 2020 By JL Risk Management Consultants

Workers Comp Email Still Best Way To Document Communications – Five Quick Rules 

Workers Comp email still provides the best way to document files.  The sender and receiver can both have documentation of the communication in writing.  Some carriers and TPA’s do not add the email directly into the file.  They instead document what was said in the email. 

picture of CRT Memory for workers comp email processing

Public Domain – Ben Greene

These quick workers comp email rules are for insurance personnel and for anyone that needs to communicate with an insurance carrier whether workers comp or not. 

Any carrier or TPA personnel reading this – check with your department’s manual as it may differ from the five rules.  Your manual always wins. 

My advice to anyone calling an insurance company or to anyone working in an insurance company remains the same as I recommended 10 years ago – use email – avoid phoning if possible. 

The five quick rules for workers comp emails and the file are:

  1.  Compose an email as if it may show up in court someday.   As a workers comp expert witness, I have read internal emails that were damning, to say the least.  Do not consider an email private.  We have all learned from social media that what you post cannot be taken back. 
  2.  Always keep an exact copy of the email received for documentation purposes.  Your own documentation of the email may not match its intent.   Even if you have to cut and paste an email right into your notes, do it.   Old school -print it out. 
  3. Do not use company email for personal items.  See #1 above.  Reading through notes as an expert witness, I came across an insurance worker discussing their upcoming divorce with a family member through the insurance carrier’s email.  (ouch!)

    Boxes of workers comp email documents repository shelve

    Wikimedia Commons – The National Archives

  4. Do not use a provider like Yahoomail, Gmail, or Hotmail at your workstation.  Anything that goes through your company’s server is stored somewhere.   I have seen those emails as part of a file’s documentation while serving as an expert witness for a TPA.  Ouch!  
  5. Do not use your company’s servers while using your phone for personal items.  See #4 for why.  Make sure you are on your personal phone provider’s network.   Any supervisor or manager may not like the overuse of your personal phone while at work. 
  6. Bonus – These rules still apply if you are telecommuting.  Sometimes we become more relaxed while working out of our homes.   Bill Gates once said – when you send an email it is stored on at least five servers.   

Next week I am going to cover my 3-3-3 rule for workers comp email or any type of communications.   See you next week.

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Emails Tagged With: Bill Gates, documentation, Expert Witness, Telecommuting, workstation

Workers Comp Webinar Technical Difficulties Can Be Avoided

July 9, 2020 By JL Risk Management Consultants

Dry Runs Eliminate Workers Comp Webinar Technical Difficulties 

Unfortunately, Workers Comp webinar technical difficulties do happen now.  The statistics will catch up with the webinar community.  With so many workers comp webinars being presented, an organization cannot avoid having random technical difficulties. 

picture of spirit phone workers comp webinar technical

Copyright Release under Wikimedia Commons – Ming Doyle

Bill Gates Says Pandemic Provided Opportunities 

On a side note, Bill Gates, the multi-billionaire tech icon posted last week that the pandemic enables the public to have a great opportunity to learn so much through webinars.   

He was spot-on.  I know of five workers comp webinars that I could have signed up for just this week alone.  I have set through more webinars in the last three months than the last three to five years. 

Workers Comp Panel Webinar – 10 Minutes and Counting

The one cautionary instance happened yesterday with a webinar that was offering a CEU for an hour-long webinar.  I decided to register and check it out.  I will not identify the company or the subject for anonymity.   

I wanted to thank them for providing a free webinar on a timely topic. 

The panel started the webinar with a 10-minute round of everyone on the panel and the host speaker saying, “can you hear me, can you hear me?”   The old Verizon commercial started ringing in my head. 

The monotony dragged on until the host speaker called the main speaker to tell them to start their presentation.  This happened approximately 10+ minutes after the start of the webinar. 

Some of the panelists could hear each and the host speaker.  Some were left adrift. 

Now the panelists started late and were rushed and then some could not tell when the other started or stopped.  

My Experiences With Preparation For Webinars 

The Prepared Ones Went Smoothly

Vector of Workers Comp Webinar Technical Presentation at office

Wikimedia Commons – Vector Open Stock

The smoothest webinar presentations I have ever done were with the Academy of Insurance approximately five years ago.  I covered four webinars in six months.    The person running the webinar called me the day before to do a dry run.   I was on the line 30 minutes before the webinar doing a preparation dry run.   We did a third dry run five minutes before the presentation.  

I thought this was overkill.  Now I see that it was not as there was a technical difficulty in one of them that was corrected with me replacing my microphone due to loopback sounds.   The saved all the participants having to listen to an echo for an hour. 

The two people that I worked with at the Academy of Insurance have moved on since then.  Their overkill made for great webinar experiences. 

Statistics Caught Up With One Presentation – Painful Workers Comp Technical Problem

I have “jumped on the podium” often with webinars over the past five years with no hitches.   I usually request a dry run of some type before turning on the live mic.  

The workers comp technical difficulty stats caught up with me.   I was using an older computer that had a slower modem.  I had used it before with no problems.   Tun, I would have realized this problem and would have hooked my laptop directly into my router. 

Old Stock Workers Comp Webinar Technical Computer

Wikimedia Commons – Leif K-Brooks

 If you happen to not know how to do this check out this article I wrote at the start of the pandemic.   Hooking a CAT-5 cable from your notebook directly into your router and WHAM! – lightning speeds.   You should have a pile of CAT-5 cables.  They have been around since the 1980s.  

Yes, I do have a heavy IT background that has helped me greatly over the years.  I decided to write two articles after listening to presenters have technical difficulties presenting from home. 

 If you are hosting or presenting a webinar, another article I wrote that same week can be found here on how to speed up your connection.  During the pandemic, speed is power – even Google said so. 

Bottom Line To Avoid Workers Comp Technical Difficulties

Presenting or listening from home causes many more difficulties during a webinar.   Be prepared and do dry runs to avoid a 10-minute delay of constantly hearing – “Can you hear me now?”   

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Webinar Tagged With: Academy of Insurance, cautionary, CEU, monotony, multi-billionaire, Verizon

Large Deductible Workers Comp Policies – Paying 50% Of Expenses?

July 2, 2020 By JL Risk Management Consultants

Large Deductible Workers Comp Policies May Require 50% Allocated Expense Payment

We often perform workers comp policy reviews as part of our premium reduction consultant services.  Large deductible workers comp policies usually have a deductible amount ranging from $100,000 (the minimum) to $5million.    

picture of large deductible workers comp euros

Wikimedia Commons – Public Domain

The most popular retention level (think car insurance deductible) is $250,000.   J&L has reviewed many insureds with a $250,000 deductible. 

One would have to ask if an insured has over a $1,000,000 deductible – why not just pursue self-insurance?

Large Deductible Policies = Hyrbid Agreements 

Large deductible workers comp policies consist of hybrid agreements.  Some policies include side agreements.  The side agreements may cover many specifics of the large deductible policy.

These agreements can be complicated at times.   One area that stands out on a large deductible policy is the handling of allocated adjustment expenses.  

The insured clients often discover they are paying for 50% or more of the expenses than an insured with a regular no-deductible policy that pays only premiums.   

ALAE does not count in the Experience Modification Factors (E-Mods or X-Mods).  

The insureds sometimes do not realize they are paying for something that can be extremely costly.    

What Are Allocated Adjustment Expenses? 

Growing Bindweed Plants Large Deductible Workers Comp On the Ground

Wikimedia Commons – Mark Dixon

Allocated adjustment expenses are defined as any expense the insurance carrier incurs when paying for the adjustment of the claim.   ALAE can be an expensive part of the claim.  

In California, the true allocated adjustment expenses cost as much as the indemnity and medical benefits combined.   

Allocated adjustment expenses are usually:

  • Private Investigators 
  • Defense Attorneys 
  • Rehabilitation nurses – a debated item
  • Bill Review 
  • Medical Network Fees
  • By Agreement<<<Watch these expenses

The exact ALAE expenses may not be spelled out in the large deductible policy or contract.  

The expenses are usually listed on a loss run in the third column.  They are denoted as Expenses on most loss runs.  Check out any loss run, and you will see them.  Large deductible workers comp loss runs usually show the same three columns – Indemnity, Medical, And Expenses.   

Where Are Allocated Expenses in Large Deductible Workers Comp Policies?

The reason this article appears before you came from one of our clients who renewed on July 1st.   The client is a governmental agency.  Their policy runs from 7/1 to 7/1 of each year.  

The large deductible agreement was forwarded to J&L on June 29th at 4 PM.  (Ouch!).   We found the 50% agreement in a side agreement.   How did we find it so fast?  We used the best workers comp policy review tool in existence.

We then asked for 10 years of loss run data.  When we reviewed the allocated expenses, they were not that high, so the impact of the workers comp large deductible allocated expense was not that significant.   We had to use a few homegrown actuarial tools to forecast their next three years of expenses adjusting for inflation – especially medical.

Large Deductible Workers Comp Programs – Worth It? 

A boy of Large Deductible Workers Comp raise hand

Wikimedia Commons – Jim Larrison

Many of our clients have benefitted from using these programs.  No one says that insurance carriers are trying to pull a fast one with the 50% ALAE reimbursement.  Just remember, before you sign up with these programs that you read everything very carefully and ask a ton of questions. 

You must live with your large deductible workers comp program.  Make it work for your company.  

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Large Deductible Tagged With: ALAE, Defense Attorneys, homegrown, Hybrid Agreement, private investigators, third column

Workers Comp COVID-19 Presumption Was Already In Place

June 25, 2020 By JL Risk Management Consultants

Workers Comp COVID-19 Presumption – There’s An Occupational Disease Statute For That – J&L 

State after state enacted their Workers Comp COVID-19 presumption orders to make sure the frontline workers in the Coronavirus pandemic were covered if they contracted the disease.   The states then began to expand which workers were covered if they contracted COVID-19.   

picture of Workers Comp COVID-19 Presumption

Public Domain – NIH

The workers’ comp blogosphere was buzzed for many weeks with almost all states providing press releases of their Governors ordering coverage if their intrastate workers contracted COVID-19. 

Mark Walls of Safety National commented on his LinkedIn posts over the last few weeks that workers’ comp has long had workers’ comp laws and rules on occupational diseases.  He could not have been more accurate. 

I have spoken with a few workers’ comp expert consultants that raised the same point.  Why do we need Workers Comp COVID-19 presumption laws when they already exist “on the books?”

Radium Girls Started The Process

Ever since the Radium Girls of the early 20th century contracted horrible illnesses and disfigurement (read more on that here) each state, in turn, enacted occupational disease laws.  Please note some of the pictures of the Radium Girls show heavy disfigurement (be prepared).   

The Radium Girls painted the glow-in-the-dark on watch faces so that soldiers could see the time even at night while still operating under the cover of darkness.  The material used exposed the ladies to low-level radiation over long hours and several years.  

The public outcry for these young ladies to receive proper treatment for their injuries began the age of the non-accidental injury. 

Occupational Disease – A Different Animal 

Micro Coronavirus Workers Comp COVID-19 Presumption Figure

Wikipedia – NIAID

The statutes said some injuries come from exposures or the contraction of a disease.   An “accident” or “incident” was not required for workers’ compensation claim compensability.   

The main requirement for an occupational disease claim originates with a treating physician relating the disease to exposures in the workplace.  The Statute of Limitations becomes critical in these claims.  Why? 

If the treating physician diagnoses a condition as work-related, the injured employee’s timeclock for filing a claim starts at that time, not from the date of first exposure.    

The last injurious exposure debate starts at that point if the employee performed the same job for different employers over the years.  I will leave that point alone. 

Adjusters Heavily Trained In Occupational Disease Claim Handling 

Carpal Tunnel Syndrome represents well over 50% of the occupational disease claims I have handled or consulted on over the years (30+).   Most of the carpal tunnel claims were eliminated over the past decade.   Safety and Risk Management won a large victory with the 50% reduction of a very disabling disease.  

Other Occ Disease claims types I have handled or consulted on are:

  • Raynaud’s Syndrome 
  • Hearing Loss 
  • Black Lung 
  • Brown Lung
  • Popcorn Lung 
  • Silicosis
  • Mesothelioma 
  • Welder’s Eye 

The list goes on for many other types of disease claims.  

Microscope Workers Comp COVID-19 Presumption at the room

Wikimedia Commons – Acagastya

From Day one in the adjuster training that I received, carriers and TPA’s covered occupational disease claim handling.  Most workers comp claims adjusters receive extensive training in occupational disease claims.  Why? 

These types of claims become the most expensive claims in an adjuster’s file load.  The medical record review becomes tantamount before accepting or denying a claim.  The adjusters are required to request one or multiple independent medical exams for a compensability review on a very strict timeclock before making the accept/deny decision. 

With the file reserves increasing exponentially over time, the claims adjuster will review the claim with their supervisor, manager, and Vice-President at a minimum.  The claims adjuster needs to have their “ducks in a row” for these reviews. 

Work Comp claim departments often assign occupational disease claims to their Senior Adjusters due to the likelihood of very intense medical report reviews and the higher reserve amounts. 

Example of Occupational Disease Statutes 

I use North Carolina as an example of occupational disease statutes/laws/rules.  Our HQ is in the Tarheel State.  I bolded the parts that make a disease a “non-accident” accident. 

§ 97-52. Occupational disease made compensable; “accident” defined.

Disablement or death of an employee resulting from an occupational disease described in G.S. 97-53 shall be treated as the happening of an injury by accident within the meaning of the North Carolina Workers’ Compensation Act and the procedure and practice and compensation and other benefits provided by said act shall apply in all such cases except as hereinafter otherwise provided. The word “accident,” as used in the Workers’ Compensation Act, shall not be construed to mean a series of events in employment, of a similar or like nature, occurring regularly, continuously or at frequent intervals in the course of such employment, over extended periods of time, whether such events may or may not be attributable to fault of the employer and disease attributable to such causes shall be compensable only if culminating in an occupational disease mentioned in and compensable under this Article: Provided, however, no compensation shall be payable for asbestosis and/or silicosis as hereinafter defined if the employee, at the time of entering into the employment of the employer by whom compensation would otherwise be payable, falsely represented himself in writing as not having previously been disabled or laid off because of asbestosis or silicosis. (1935, c. 123; 1979, c. 714, s. 2.)

I will save you having to read through all the diseases in § 97-53.  That statute can be found here.  The occupational disease list takes up three pages – and it should.

Bottom Line On Workers Comp COVID-19 Presumption Orders 

Little girl with her mom during Workers Comp COVID-19 Presumption pandemic

Wikimedia Commons – vperemen.com

Yes, the Governors, Insurance Commissioners, and Workers Comp Commission tried to protect their citizens – especially frontline workers – in case they contracted COVID-19 from their very important jobs.  (Thank You) 

The Workers Comp systems in each state already allowed for the adjustment and compensability determination without having to have presumption orders in place.   

Even with presumptions in place, for example, the State of Colorado carriers denied over 30% of their COVID-19 claims.  Florida denials came in at 70%.  Either one of those numbers should be startling or did claimants in those states consider that COVID-19 automatically generated a compensable workers’ comp claim? 

The Workers Comp COVID-19 Presumption laws, rules, and orders are already on the record.  One must ask, were they necessary?

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Occupational disease Tagged With: asbestosis, blogosphere, Mark Walls, mesothelioma, Radium Girl, silicosis, timeclock

How To Ruin A Workers Comp Claim in Five Seconds, Claim Number?

June 17, 2020 By JL Risk Management Consultants

Asking For Claim Numbers Can Wreck Any Workers Comp Relationship – J&L 

Yesterday, I was trying to locate a claim for a long-term client.  I was following the subrogation status on a claim for them.   I was told that I had left out one number in a 22-character claim number. 

pay phone booth workers comp claim number

Wikimedia Commons-Chriistina Helmsman

The claim was not showing up on a loss run the client ran for me to review.  This situation harkens me back to what I have not done in Workers Compensation for 30+ years.  

Why I Never Ask For Or Reference Claim Number – A Little Secret 

When an injured employee calls in, asking for a claim number does one thing – it reminds the caller or emailer that they are a number, not an individual.   In 30 years, I have not looked up any injured employee by a claim number – never, ever.  

Injured employees with resolved claims were interviewed by WCRI for a study they were conducting.  Dr. Savych produced a landmark study on what happens to injured employees post-claim. 

One word came up that determined whether an employee felt the claims process went well.  That word was “trust.”  If the employee trusted their employer before the accident, claims usually resolved more quickly. 

Asking for a workers’ comp claims number may be a great way to pull up a claim.  I have always looked up the injured employee by:

  • Name
  • Date of birth
  • Employer
  • Accident Date. 

I never used the claim number.  I thought that it impersonalized a somewhat personal transaction. 

An Example of Claim Number Alienation 

Man driving Claim Number rainy road

Wikimedia Commons – Oregon Department of Transportation

Approximately eight years ago, I, unfortunately, ran into a deer while traveling at 65 miles per hour.  Calling in a claim to my auto insurer at midnight from a hotel room was beyond stressful. 

After going through the usual phoned-in claims reporting question, the adjuster gave me a long claim number that I did not write down accurately.   

The next morning,  I called back in to see about obtaining a rental car.  My auto insurance carrier phone rep asked for the claim number.  I, due to stress, and sleeplessness misplaced the claim number. 

The phone rep kept asking for it.  I said that I have my policy number on my proof of insurance. or could he/she not look it up by my name and date of the accident?  After 15 minutes of waiting, they came back on the phone with my 20+ digit and letter claim number.   I was told it was critical to use that number when calling in after then.  

I never called the company again and switched auto carriers at the next renewal.

Bottom Line – I felt like just another number – not really a personal interaction. 

Best Way To Find a Person’s Claim

Injured Army Claim Number on knee

Wikimedia Commons – U.S. Army Europe Images

Pulling up the claim by the injured employee’s name and the employer was always the best way for me.   I did not ask them for something that the carrier or TPA had given them to remember and reference.  I always asked for info that existed before the claim, not after. 

The great adjusters and claim reps seem to always develop some time of personal relationship with the injured employee unless of course if they were represented by an attorney.

Did you ever notice when you deal with a doctor’s office, they do not ask you for a patient number?  I wonder why? 

Bottom Line – This advice may seem a little picky.  Try it and you will see how it changes your relationships with your injured employees.   Avoid asking for claim numbers.

 

©J&L Risk Management Inc Copyright Notice

Filed Under: claims department Tagged With: Alienation, Dr. Savych, harkens, impersonalized, landmark, rental car

Are The Recent Class Code Changes Saving My Company Premium?

June 11, 2020 By JL Risk Management Consultants

The Recent Class Code Changes – A Further Look – J&L 

The recent class code changes buzzed in the workers’ comp news for well over a month.   Why am I writing another article on this subject?  The class code changes convert into amounts of premium dollars > your company’s budget. 

picture - a closer look at recent class code changes in newspaper

Wikimedia License – Dutch National Archives

One does not have to be a premium auditor to appreciate how much budget can be expended with the change of code.  The answer is a huge amount.   

I had written a few articles concerning the changes over the last two weeks: 

Two very recent articles – 

California Adds 8871 Telecommuting Employee Class Code

Accounting For Paid Furloughed Employees 

 

Comparing The Advisory Rates (called different names in different states)

Examining the advisory rates (pure premium rates, Loss Costs, etc.) should give one an indication of what each rate will comparatively cost your company.    The most common classification code rates mentioned by me in the last few weeks are:

  • 8810  Clerical Administrative – The Magical Mystery Code
  • 8871   Telecommuting Employee 
  • 0012   Furloughed Employee – still paying their salaries or wages even though they are not currently working. 

Most of the comparable rates exist behind paywalls.  I will use our home state of North Carolina for comparison purposes.  North Carolina’s Rate Bureau converted from NCCI to a completely independent bureau in ***. 

The pure Loss Costs are per $100 of remuneration (modified payroll):

  • 8810 – .07 
  • 8871 – .04 
  • 0012 – .00 

Let us not go into the specifications of each code here.   These three codes have been covered often in our set of articles. Use the search box. 

If you have any questions on the class codes, please comment below or use the Contact Us page.  

Five Caveat/Caution/Cart Before The Horse Considerations 

U.S pennies recent class code changes 2008

Wikimedia Commons – Roman Oleinik

Looking at those rates, one might think – Hey, 8871 is a cheaper code.  Cheapest does not necessarily mean cheaper. 

  1. Any class code that starts with 88 has very particular rules.  Many unpublished Rating Bureau decisions shape those codes.  
  2. The insurance carriers file Loss Cost Multipliers to deviate from the rate.  No carrier HAS to accept those base rates.  The carrier’s underwriters can easily and often do change the rates by filing a list of Loss Cost Multipliers. 
  3. If you are in the Assigned Risk Pool, your rates will be different – much more expensive, use the Contact Us link above if you have questions concerning the Assigned Risk Rates.  
  4. An important one that an 80-year-old premium auditor taught me many years ago.   Say that many companies change some of their employee’s jobs to fit 8871.   More accidents now happen to 8871 employees.  The number of claims paid for the 8871 codes spikes and the accident rate for 8810 falls.   The rating bureau actuaries adjust the rates to fit the claims experience.   Now you have your employees in a rate code that increased 150%.  Uh-oh.  
  5. California has just now published the 8871 code.   It will not count until 2021.  The rates will have to be developed for a few years.  The pure premium rates (Loss Costs) may vary greatly. 
  6. Bonus – Each state is unto its own on the Advisory Rates.   States such as California, New York, Colorado, and others may have different Advisory Rates.  The very tech-heavy states may contain many telecommuting employees. The North Carolina codes above were used as an example for discussion.

Bottom Line On The Recent Class Code Changes

Know what you are doing when you start to reclassify employees in your company.   The main time to understand the recent class code changes comes at premium audit time.  The premium audit bill is usually your final bill for that policy year. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: classification code Tagged With: advisory rates, assigned risk pools, Loss Costs, Telecommuting

California Workers Comp Telecommuting Class Code 8871 Added

June 4, 2020 By JL Risk Management Consultants

 Telecommuting Class Code 8871 Added To California WCIRB Class Codes

California’s Workers Comp rating bureau (WCIRB) added in Telecommuting Class Code 8871 after a regulatory meeting this week.  

picture of train engine telecommuting class code 8871

Wikimedia Commons – Dan from PQ, Canada

If your company is domiciled in California or you have California-based employees,  you will need to separate these employees from furloughed employees and 8810 Clerical Administration employees.   

The Telecommuting Class Code becomes effective on January 1, 2021.   Regardless, preparing your accounting or bookkeeping software to add in this code will save many unneeded headaches when your premium auditor makes their yearly appointment or when you self-report your payroll. 

NCCI – the rating bureau for approximately 40 states released their advisory last month on reporting 8871 Telecommuting Class Code for in-home workers last week. 

The agenda notes from the WCRIB can be found here.  You can search for 8871 in the notes   They WCIRB  will have another meeting on this and other subjects in August.  

From The Meeting Agenda

Item III-A

Giving Presentation of Telecommuting Class Code 8871 in Conference Room

StockUnlimited

Clerical Telecommuter Employees
In response to state and local stay-at-home orders necessitated by the Coronavirus Disease 2019 (COVID-19) pandemic, many California employers have limited their employees’ duties to clerical work that can be accomplished from employees’ homes. In view of this recent and significant increase in “telecommuting”, at the April 14, 2020 meeting, members of the WCIRB’s Classification and Rating Committee noted that several other jurisdictions maintain a specific classification for telecommuters and recommended that the WCIRB consider establishing a similar classification so that statistical data can be captured for clerical telecommuter employees.

Currently, telecommuting employees whose duties meet the definition of Clerical Office Employees1 found in the California Workers’ Compensation Uniform Statistical Reporting Plan—1995 (USRP) are assignable to Classification 8810, Clerical Office Employees, or to their employers’ standard classification if that classification specifically includes Clerical Office Employees.

While California does not have a unique classification for clerical telecommuting, the National Council on Compensation Insurance (NCCI), as well as a number of other jurisdictions, use Classification 8871, Clerical Telecommuter Employees, for employees that spend more than 50% of their time performing clerical duties from a clerical work area located within their home, 2 provided the remainder of their time is spent engaged in clerical duties at the employer’s place of business. If 50% or more of their time is spent performing clerical duties at the employer’s place of business, Classification 8810 is applicable.

Since the use of telecommuting will likely grow in California, staff is proposing that Classification 8871, Clerical Telecommuter Employees – N.O.C., be established as a Standard Exception classification applicable to clerical employees who work more than 50% of their time at their home or other office space away from any location of their employer. This will enable the collection of payroll and loss data for these employees to determine if their exposure differs from that of other clerical employees who work primarily at their employer’s office location and will align California with other jurisdictions that assign clerical telecommuters to Classification 8871. Additionally, staff is proposing amendments to Classification 8810, Clerical Office Employees, and Section III, Rule 4, Standard Exceptions, of the USRP for consistency with this proposal.

There are 41 classifications that specifically include Clerical Office Employees and 2 classifications that specifically exclude Clerical Office Employees. 3 When a classification phraseology specifically includes Clerical Office Employees, all clerical employees are assigned to that classification, and not to Classification 8810. As the proposed scope of Classification 8871, Clerical Telecommuter Employees, embraces operations performed by Clerical Office Employees, staff recommends that each of these 43 classifications be amended to also specifically include or exclude Clerical Telecommuter Employees. These amendments are necessary to make clear that all clerical telecommuter employees are also included in, or excluded from, the scope of these 43 classifications.

Telecommuting Class Code 8871 and 8810 

Woman using laptop Telecommuting Class Code 8871 wearing headset

StockUnlimited

Do not rush to move employees after January 2021 from Class Code 8810 to 8871.  You will need to compare each of those codes once published by the WCIRB in its final form.  Class code 8810 tends to be less expensive than 8871.  With the wave of work from home employees, one cannot make that a 100% true cost statement yet. 

When the final Telecommuting Class Code 8817 has been published by the WCIRB, I will update this article or add a new one. 

 

©J&L Risk Management Inc Copyright Notice 

Filed Under: classification code Tagged With: bookkeeping, Clerical, phraseology, self-report

How Do We Account for Coronavirus Furloughed Employees – NCCI

June 4, 2020 By JL Risk Management Consultants

Account for Coronavirus Furloughed Employees – NCCI Adds Basic Manual Rules 

The Question – How do we account for Coronavirus Furloughed Employees has become the most popular question that we now receive from blog and newsletter readers.  

picture of accountant account for coronavirus furloughed

Public Use License – Wikimedia

This is not a replacement for Class Code 8871 – Telecommuting Clerical Employees.  See this article for that distinction. 

NCCI – the workers’ compensation rating bureau for approximately 40 states added in a few new sections to their rules.   If you are the person responsible for the bookkeeping or accounting with your company and you are trying to account for Coronavirus furloughed employees, you are in luck.  

Below is a summary of the rules that NCCI added to their manuals.  I am not going to paraphrase the rules. I do not like quoting NCCI rules verbatim.    In this case, the rules are very specific, so I added them in almost verbatim in parts.  The very important part of the rule has been bolded. 

Recording the payroll inaccurately could cost your business a large amount of insurance budget.   

Woman doing Account for Coronavirus Furloughed bills

StockUnlimited

Payments made by an employer or any public governmental entity to paid furloughed employees as a result of federal, state, and/or local emergency orders, laws or regulations, issued due to the COVID-19 (coronavirus) pandemic which impact an employer’s staffing or business operations.

Look at this part of the rule closely – 

However, any appropriated funds or loans received by an employer as authorized by any law or regulation, or public governmental entity, that are used by an employer specifically to retain or hire working employees are not excluded.

This rule has a built-in expiration date – 

This Rule 2-B-2-n is effective March 1, 2020. The expiration date of this rule will be December 31, 2020, which may be amended to an earlier or later date as circumstances warrant in consultation with state regulatory authorities. This rule will be removed from the Basic Manual automatically, upon the applicable expiration date.

Idle time does not count as furloughed. 

Middle-aged couple working Account for Coronavirus Furloughed on laptop in kitchen

StockUnlimited

For purposes of this Rule 2-F-1, idle time does not include “paid furloughed employees” or “payments to paid furloughed employees” as provided in Basic Manual Rule 2-F-3. The expiration date of this paragraph will be December 31, 2020, which may be amended to an earlier or later date as circumstances warrant in consultation with state regulatory authorities. This paragraph in this Rule 2-F-1 will be removed from the Basic Manual automatically, upon the applicable expiration date.

3. Payments to Paid Furloughed Employees During Federal, State, and/or Local Emergency Orders, Laws, or Regulations Issued Due to the COVID-19 (Coronavirus) Pandemic

Florida has a few exceptions that I did not note here.  

For purposes of this Rule 2-F-3, ”paid furloughed employees” and “payments to paid furloughed employees” are defined within this rule. “Paid furloughed employees” means employees who continue to receive payments during a temporary layoff or an involuntary leave and are not performing any work duties for an employer.

“Payments to paid furloughed employees” means payments made by an employer or any public governmental entity to paid furloughed employees as a result of federal, state, and/or local emergency orders, laws or regulations, issued due to the COVID-19 (coronavirus) pandemic which impact an employer’s staffing or business operations. Such payments do not include any appropriated funds or loans received by an employer as authorized by any law or regulation, or public governmental entity, that are used by an employer specifically to retain or hire working employees.

Your Workers Comp Premium Auditor and Your Payroll Records

Hand holding a calculator Account for Coronavirus Furloughed calculation

StockUnlimited

Payments to paid furloughed employees must be assigned to Code 0012, in accordance with the Statistical Plan. Payments to paid furloughed employees made in accordance with this Rule 2-F-3 are excluded from the premium and experience rating calculations only if the employer keeps separate, accurate, and verifiable records. If separate, accurate, and verifiable records are not maintained, payroll is assigned to the classification for work normally performed by the employee prior to any emergency orders, laws, or regulations issued due to the COVID-19 (coronavirus) pandemic.

This can cost your company a large amount of premium if you do not keep accurate payroll records that separate out furloughed employees. 

If an employee is requested to perform any duties for an employer, the employee is not deemed a paid furloughed employee for any period of time they are performing duties for the employer. If the employee is not deemed a paid furloughed employee, payroll must be assigned to the classification applicable to the work being performed in accordance with Basic Manual Rule 1-A. 

This Rule 2-F-3 is effective March 1, 2020. The expiration date of this rule will be December 31, 2020, which may be amended to an earlier or later date as circumstances warrant in consultation with state regulatory authorities. This rule will be removed from the Basic Manual automatically, upon the applicable expiration date.

Set Up Your Accounting Package Now To Handle These Employees 

Excel(r), QuickBooks(r), or Your Accounting Package can now be your best aide in keeping track of furloughed employees.   Keep the employees listed under 0012 Coronavirus Furloughed Employees.  Your premium auditor will ask for these records.  

 

©J&L Risk Management Inc Copyright Notice

Filed Under: NCCI Tagged With: circumstances, coronavirus, Furloughed, Manual Rule, warrant

Workers Compensation Rating System – See You in 18 Months

May 28, 2020 By JL Risk Management Consultants

The Workers Compensation Rating System And Insurance Press – Different Timetables

The Workers Compensation Rating System was built as a delayed system.   Why was that statement the first sentence in the article? 

Picture of 18 months workers compensation rating system

Wikimedia Common License – Claude Covo-Farchi

The Workers Compensation rating system cannot provide immediate data analysis.   NCCI, WCIRB, and the other state rating bureaus allow for a term called claims development.   

Claims departments do not review their claims weekly to see if the reserves are correct.   See this article on how adjusters work their claims. 

Any data from a rating bureau may look stale or out of date.   The Workers Compensation rating system allows the claims in a certain policy to develop for an extra 18 months before the data is reported.  

The UNISTAT date pegs the claim reserve data with the Total Incurred amounts 6 months after a policy ends.  

A few articles are floating around in the press where the author seems astounded that the rating bureaus cannot provide immediate data reporting.    I have even caught myself asking the WCIRB for immediate results.   

Two weeks ago the NCCI produced a great teleconference that substituted for their Annual Issues Symposium.   The lineup produced a great teleconference.    The total attendance (including me) topped out at 2600.   The platform NCCI used published the number of participants at the bottom of the screen. 

NCCI could not answer this question and rightfully so – What are you seeing as far as COVID-related data?  That answer was a stretch for the presenters.  

Of course, the press wants to break new stories – that is why they call it the news.   Press outlets want fresh data now.   Unfortunately, if one takes a look at any statistical study that is based on rating data, most of them right now show solid data for 2018 and projected data for 2019.  Why?  Because once again, the Workers Compensation rating system originates from older data.  

Stopwatch workers compensation rating system on a palm

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Let us use the date of the teleconference for the date a certain workers’ compensation policy ends.   The date of the conference was  May 12th. 

Any COVID-19 related claims for a policy that ended  (not started) on May 12th would not be reported to NCCI by the carriers until November 12 2021 or later.      

Many reports that I write for clients always contain when the claims from a certain policy will take effect.   I always receive questions on the timing of the data from new clients.   

Feel free to search this blog for the UNISTAT date for more info. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Workers Comp System Tagged With: Annual Issues Symposium, data analysis, teleconference, UNISTAT date

Work Comp Class Code 8871 Clerical Telecommuter Very Popular Now

May 27, 2020 By JL Risk Management Consultants

Work Comp Class Code 8871 Popular During the Coronavirus Pandemic 

The Workers Comp Class Code 8871 represents telecommuters.  Exactly who are telecommuters?  Let us first cover the general non-workers’ comp generic definition. 

Picture Coronavirus class code 8871

CDC Public Use License

 

Definitions of Class Code 8871 

General 

Telecommuters are defined as: 

  1. Someone who works at home and communicates with his or her office by phone, email, or internet.
  2. On another level, the teleworker or telecommuter is someone with computer knowledge who can utilize and work on data transmitted down a telephone line or bounced off a satellite

The first definition covers many people who are working out of their homes now for their employers.   The second definition seems a little archaic.  

Workers’ Compensation Rating Bureau (NCCI) definition(paraphrased):  

For purposes of  Class Code 8871:

  • A residence office is a clerical work area located within the home of the clerical employee.
  • The residence office must be separate and distinct from the location of the employer. In the event
  • If an employer operates a business from a residence and the employer has clerical staff at the employer’s business location residence, these clerical employees are classified to Code 8810.

Clerical duties of an employee classified to Class 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.
  • Depositing funds at banks*
  • Purchase of office supplies*
  • Pickup or delivery of mail* 

*Outside the office duties are incidental and directly related to that employee’s duties in the residential office.

State Exceptions To Class Code 8871 

The following states do not allow this class code: 

  • California
  • Massachusetts
  • Montana
  • New Jersey
  • Oregon
  • Texas 

I will not research each of the states besides California

Calfornia has its own rating bureau – the WCIRB.  Many of our article and blog readers are from the Golden State.    California may introduce Class Code 8871 after their June 2, 2020 meeting.  The WCIRB lists the topic for discussion at this meeting.     

Will the WCIRB use the same code?  We will find out sometime in June.  

Two Very Similar Caveats 

  1. Some Classification Codes include telecommuting clerical employees as part of the basic code.  Do not assume that all telecommuters are listed under 8871.   An example is Doctor’s offices. 
  2. Do not assume everyone working from home goes under Class Code 8871 – such as delivery drivers.   

Coronavirus Pandemic And Wage-Splitting (Very Important)

Close-up of female surgeon Class Code 8871 wearing face mask

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One of the questions that we have received often since the pandemic shutdowns started-  If an employer is mid-policy and requires employees to work from home, how do they handle their wage reporting when the job changes to a telecommuter. 

From this NCCI webpage:  

In accordance with Basic Manual Rules 1-D-3 and 2-G, the employer would be responsible for maintaining separate payroll records for the change in operations or the wages earned for an employee whose occupation has changed. If these records are not maintained, then all payroll would be assigned to the highest-rated applicable class code. See footnote. 1

1An example could be a retail store that remains open for delivery of goods but closes the showroom to consumers. Several of the retail showroom employees will work from home to assist with phone orders, customer service calls, and related clerical paperwork. These employees may be reassigned to Code 8871—Clerical Telecommuter Employees.

_____________

You must split the payroll between when the employees were working in an office and then when they had to work out of their home due to the coronavirus lockdowns.  

Bottom Line – 

Hand pointing Class Code 8871 at a financial concept

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Sloppy or ignoring your wage and time recordkeeping is going to cost you dearly with your worker’s comp audit and will likely affect your company greatly during tax reporting time.   

Organize your records now.  If you have them organized – a good job.  Switching to the proper Class Code be it 8871 or another code may save your company a large amount of premiums. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: classification code Tagged With: archaic, Clerical, lockdowns, satellite, telecommuters

Free Workers Comp Study – Best Report on Medical Costs WCRI

May 21, 2020 By JL Risk Management Consultants

Free Workers Comp Study – WCRI Medical Price Index – A Great Reference Tool 

WCRI (Workers Compensation Research Institute) released its annual free workers comp study and report on medical prices for the treatment of Workers Compensation injuries.  

picture of free workers comp study and beer

Wikimedia Commons – JP

Please see the bottom of this article for the link to the free report. 

The breadth and depth of the report astound me as a free publication.  The report covers over 88% of the medical benefits paid in the US.   If you are looking for trending information, the study spans 12 years (2008 – 2019).   

WCRI only asks that you give them your contact info.  The group does not spam you after sign-up.   Claims staff could use it as a basis for setting reserves with very little extrapolation of the provided numbers and statistics.  (Hint)

From WCRI:

This annual study creates an index for the actual prices paid for professional services over a 12-year span from 2008 to 2019 based on a market basket of commonly used services for treating workers with injuries. This study also provides a baseline for policymakers and other system stakeholders to observe any effects the current COVID-19 pandemic might have on medical prices in workers’ compensation across states and over time.

The study focuses on professional services (evaluation and management, physical medicine, surgery, major and minor radiology, neurological and neuromuscular testing, pain management injections, and emergency care) billed by physicians, physical and occupational therapists, and chiropractors. It shows how prices paid for these services compare across states, how the prices have changed, and whether price growth is part of a broader phenomenon or unique to a state. The study also discusses the price comparison results and price trends in relation to the principal policy mechanism for regulating prices—fee schedules.

These states covered are Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Wisconsin.

I am downloading the free workers comp study and report as soon as I publish this article at this link. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: WCRI Tagged With: annual free, breadth, chiropractors, depth, neurological, neuromuscular

Workers Comp Consultant Company – J&L – Top 10 Lessons Learned

May 21, 2020 By JL Risk Management Consultants

J&L – 25 Years and Counting As A Leading Workers Comp Consultant Company 

J&L Insurance started in 1996 as a Workers Comp consultant company handling the proper filing of claims forms for large self-insureds.   

Dice with 25 showing workers comp consultant company

Wikimedia Commons -Saharasav

We added services as the market requested it such as premium audit services, general consulting, blog reporting, expert witness services, and Mod audits, actuarial services, and forecasting to name a few. 

I had forgotten the anniversary this past March due to being in the middle of the coronavirus pandemic.  Talking with so many business associates I became amazed at how many now want to strike out on their own and start a business across their kitchen table as I did in 1996.  

Top 10 Lessons Learned  In A Workers Comp Consultant Company 

Couple with workers comp consultant company in office

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The Top 10 below lessons that I have learned with a Workers Comp consultant company.  The first five are general.  The second five are workers comp centric. 

  1. You are not the same as your last job.  People, governmental organizations, and companies that you have worked with in your last job may not be the customers that you had counted on for business when you started your company.   This lesson becomes a shocker for many people that tends to make them not stay a consultant for very long.
  2. The first five years are rough.  Making an appointment with a prospect and then having them not make the appointment and not return your calls or emails.  Balancing family time and work time can be a very tedious task.  If you can make it five years, most businesses will survive in one form or another. 
  3. The first year comes off as horrible.   Often, your first year has little business generated while you must afford to live and market on a shoestring.  Keeping your head up the first year is very critical.  You will be told no so many times that most people go back to a regular salary-based job. 
  4. One of the most important – do not think you have failed if you go back to a salary-based job as an employee.  You made the choice to not own and run your own business.   I tried to start my own business while working at night and then would go into my regular job during the day three or four times in the 1980s and 1990s.  My heart said go for it with the Workers Comp Consultant company.  My brain said – the bills do not stop, you have more personal bills and now business bills.<<super-critical point. 
  5. The #1 expense that new businesses experience which can easily cause failure – hiring employees too early.   I heard this warning in a public relations seminar that I attended with the local  Chamber of Commerce.  The presenter said that she had made the same mistake and then cut her staff down to four people from over 20.  Could having many employees count as a status symbol? –  Possibly. 
  6. Watch the minimum number of employees that causes Workers Comp insurance requirement.  In some states it is one employee!  Can a new employer afford a $500 a day fine?  Of course not 
  7. Workers’ Compensation has not changed that much in over 20 years.   Many buzzwords and trends have been recycled over the years.  Working across states lines can pose some difficulties, but workers’ compensation has the same variables and procedures.

    Smiling workers comp consultant company Businesswoman

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  8.   Blogging remains a requirement in this industry.  Websites are even more of a requirement.  Google, Bing, and other search engines do not rank you in the search results because you have a spiffy website.  Content is king and queen in almost any industry.  Blogging must be in your blood to write a 900-word article such as this one you are reading now. 
  9. Right now – Workers Comp sits on the back burner of the stove.  The pandemic caused a large amount of governmental action.  Most businesses try to survive daily by having remote employees and all the other benefits.  The Affordable Care Act caused businesses to do the same thing to Workers Comp in 2010 – 2016.
  10. Keep educating yourself in insurance subjects even when you do not have enough time to add on a designation or degree.  Reading workers’ comp publications each morning or night and heavily on the weekends keeps you abreast of the current developments.  I read approximately 20 publications to see the trends in this industry.  Many are free if you will sign up for their newsletter.  Some bloggers think they are gurus – be aware of what you read in insurance blogs.   
  11. Bonus – Watch out for the SFNs.  Yes, the Something For Nothings.  Like any type of consultant, your product equals your available time.  Many SFNs think that you can give them free advice.  We receive calls almost every day from someone “just wanting some advice.”  You will develop a sense of the difference between a prospect, potential buyer of your services, and someone just wants you to work as a free consultant.   You must develop those screening skills very quickly to survive. 

This list could go on for 50 more suggestions.  Do not take these as “stamped in cement.”  

One huge advantage that you have if you are a sole proprietor or very small business consultant comes from being able to change your business to fit the market very quickly.  Do not try to make the market fit your business. 

With the pandemic, if you have decided to start your own Workers Comp consultant company or as any insurance consultant, or any type of consultant – do not give up the ship too quickly.  Good luck. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: James J Moore Tagged With: actuarial services, Affordable Care Act, back burner of the stove, coronavirus, king and queen, stamped in cement, super-critical point.

Workers Comp Outpatient Medical Costs – Fee Schedules Win Again

May 14, 2020 By JL Risk Management Consultants

States With Fee Schedules Have Lower Workers Comp Outpatient Medical Costs – WCRI

Fee schedules have appeared in this blog many times due to the economic effects they have on medical bills.   WCRI (Workers Comp Research Institute) published a study this week showing that fee schedules lower Workers Comp outpatient medical costs.   The study specifically covered hospital outpatient costs. 

picture of 100 dollar bill workers comp outpatient medical

Copyright Public Domain US Treasury

The outpatient medical cost study is produced by WCRI yearly.   We here at J&L watch for this study every year as a bellwether for fee schedules versus the other billing methods.  

We liked the depth of the study – 13 years for you triskaidekaphobia sufferers. 

The study, the latest in an annual series, compares hospital payments for a group of common outpatient surgeries in workers’ compensation across 36 states from 2005 to 2018.

Let us look at these numbers.  The increased charges remain outstandingly high each year this study is published.   The name of the study is the Hospital Outpatient Payment Index: Interstate Variations and Policy Analysis, 9th Edition.  

 WCRI came to two astounding conclusions (are you ready for these numbers?).  The two researchers Dr. Formenko and Dr. Yang.  They split the numbers between % of charge-based states and states without any fee schedule.  

  • Percent-of-charge-based fee regulations were 74 to 168 percent higher than the median of the study states with fixed-amount fee schedules in 2018.
  • No fee schedules, they were 51 to 131 percent higher.
  • WCRI also found that hospital outpatient payments per episode in most states with percent-of-charge-based fee regulations or no fee schedules grew faster than in states with fixed-amount fee schedules.

Variation in the difference between average workers’ compensation payments and Medicare rates for a common group of procedures across states was even greater — reaching as low as 42 percent (or $2,574) below Medicare in Nevada and as high as 365 percent (or $17,713) above Medicare in Alabama.

This means that when using the most stable statistic among the states (Medicare rates), the statistic the hospitals have a workers comp outpatient medical cost variance of $20,287. 

Overall, the figures show a 50% difference between fee schedules states and states without them. 

Often Unmentioned Fee Schedule Benefit 

Setting medical reserves can easily confound the most experienced claims adjuster or supervisor.   States with fee schedules lessen the inaccuracy of setting medical reserves.  Some adjusters use old fee scheduled bills to compare procedure costs.  (secret shortcut). 

After 10 years of experience, most adjusters and supervisors more easily develop a sixth sense of how much a medical procedure costs in states with fee schedules.  

Workers Comp Outpatient Medical Excluded Data and States Covered 

Male Doctor of workers comp outpatient medical analyzing x-ray report

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This study captures payments for services provided and billed by hospitals; it excludes professional services billed by nonhospital medical providers (such as physicians, physical therapists, and chiropractors) and transactions for durable medical equipment and pharmaceuticals billed by providers other than hospitals. The analysis also excludes payments made to ambulatory surgery centers.

Go here for more info and to download the study.

The 36 states included in this study are Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin.

 

©J&L Risk Management Inc Copyright Notice

Filed Under: fee schedule Tagged With: ambulatory surgery centers, chiropractors, interstate variations, nonhospital medical, outstandingly high, triskaidekaphobia sufferers

Workers Comp Claim Denial Means No Medical Control?

May 14, 2020 By JL Risk Management Consultants

Court of Appeals Confirms Workers Comp Claim Denial Medical Control Loss

Does a Workers Comp claim denial result in the claims staff losing medical control?  A long-standing debate among workers comp claims adjusters still occurs today. 

picture of arm in sling workers comp claim denial

Public Use License – Wikimedia – Self

One outlook says the adjuster retains medical control on the file.  The denial may be removed later on in the claim.  The claimant should only expect covered medical treatment if they still see the “company doctor” and any referrals.   

If the claim denial sticks, then the employee’s health insurance (if they have a policy) will cover the medical expenses. 

The other side of the coin says the claims staff has no right to control the medical treatment when an adjuster issues a workers comp claim denial.  How can the injured worker treat with the employer’s (and adjuster’s) choice of treating physicians?  

The other side of the coin seems to make more common sense.  One cannot control what one does not cover.  

The most important one of my Six Keys to Workers Comp Savings points to the use of medical treatment networks to keep costs in check.  

North Carolina Court of Appeals

Stethoscope Workers Comp Claim Denial with green apple

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Recently, the North Carolina Court of Appeals made this decision as part of a large case with more contentions than just medical control.    The case was 

PAMELA LAUZIERE, Employee, Plaintiff,
v.
STANLEY MARTIN COMMUNITIES, LLC, Employer, and AMERICAN ZURICH
INSURANCE COMPANY, Carrier, Defendants.

You may find the case here if you wish to read the whole decision.  One of the three Justices wrote a very interesting dissenting (disagreeing) opinion. 

The Appeals Court in North Carolina handles appeals after an Industrial Commission Deputy Commissioner and Full Commission (on appeal) have rendered their decisions.  

A passage from the Court decision said:

As to the argument, Defendants were prejudiced by being unable to direct medical care, we have “long held that the right to direct medical treatment is triggered only when the employer has accepted the claim as compensable.”

This confirms, at least in the Tarheel State, that when a claim is denied, medical control goes to the injured employee’s choice of treatment. 

One of the most upset physician’s offices I encountered in my adjusting career was when four years of medical bills were switched from health coverage to Workers’ Compensation as agreed to at a mediation.  

Wow – the doctor’s billing staff was not happy!  The paperwork became a nightmare to reimburse the health carrier and then rebill to the comp carrier. BTW, the denial was wrongly issued by an adjuster that preceded me on the file.  

Workers Comp Claim Denial – Medical Control Decision

Senior woman Workers Comp Claim Denial sits with plaster cast on broken arm

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One aspect of a claim denial that many claim departments may miss centers around the loss of medical control.   Most denial decisions likely do not consider the amount of future medical payments if the claims are ruled compensable or if the adjuster decides to pay for the claim at a later date.  

I am not referring to the file reserves.  The claims staff will likely reserve a file as if there is a risk that benefits will be paid out sometime in the future.  Full value reserves mean the employers will pay full value in their premiums.   

If the file has no medical control a possible “rethink” needs to occur before the workers comp claim denial and its aftermath.  

My hat is tipped to WorkCompCentral.com.   I found the worker’s comp case there.  It was behind a paywall, so I could not provide a direct reference.  

The bottom line – losing medical control may offset a weaker workers comp claim denial. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: workers comp claim Tagged With: Deputy Commissioner, long-standing debate, nightmare to reimburse, PAMELA LAUZIERE, Tarheel State

Free Workers Comp Webinar Choices – Which Ones To Watch?

May 7, 2020 By JL Risk Management Consultants

Free Workers Comp Webinar Choices – Many To Choose From – Worth Your Time?

Many organizations currently offer free workers comp webinar choices.   Which ones should you check out over the next two months?  Let us check to see which ones charge nothing for the great information.  

picture of Big Ben Time for Free Workers Comp Webinars

Wikimedia – Solipsist

If Your Organization Is Providing One Add Your Free Workers Comp Webinar to the comments section 

I recently completed a six-hour webinar for my FEMA Flood Certification.   Yes, I can adjust FEMA flood claims.  The six-hour webinar provided good information.  As it was the Feds, you had to answer 20 timed polling questions throughout the webinar to guarantee credit to be FEMA flood certified.   

The webinar also provided six hours on my North Carolina all lines adjuster license along with satisfying my required flood hour.   

While it was not a free WC webinar, receiving three types of different license credits made me sign up the moment it was offered as a webinar. 

I registered for the following webinars

  • NCCI Annual Issues Symposium (May 12th)  – this article contains the signup info.   Dr. Robert Hartwig’s presentations remain cutting edge.  Why?  He gets Workers’ Compensation.  I always try to find a few great nuggets of information.  He provides a treasure chest of info each time I attend one of his lectures.  He appears in my article more than a few times.

    Hand illustrating free workers comp webinar strategy

    StockUnlimited

  • FEMA Flood Certification (Four remaining dates) – adjusters should pay attention to get six hours including a flood certification. Ignore the location data as FEMA accepts worldwide registration.  You do not have to be acquiring the FEMA flood certification if you want the hours on your state’s adjuster or agent licenses.  (Totally worth the time).  Make sure your state allows credit for the FEMA flood conference – not all do. 
  • OutFront Ideas with Mark and Kimberly –   I missed the recent May 5th free workers comp webinar.  No worries.  The webinar archive can be found here.   Kimberly and mark always provide more of a conversation than a traditional webinar. 
  • WCRI (Workers Comp Research Institute) – no webinars scheduled.   Their archive would keep you busy for days. 

I will update this free workers comp webinar list over the next few weeks until most of the lockdowns finish. 

 

©J&L Risk Management Inc Copyright Notice 

Filed Under: Webinar Tagged With: FEMA, lockdowns finish, required flood hour, six-hour webinar, treasure chest

Workers Comp Telemedicine – Is Telehealth Really Worth It?

May 7, 2020 By JL Risk Management Consultants

Is Workers Comp Telemedicine In The Age of COVID-19 Worth The Time and Money?

 After experiencing my first telemedicine (telehealth) appointment today, I decided to see if Workers Comp Telemedicine would be worth the conversion. 

Picture of Russian Workers Comp Telemedicne

Wikimedia License – Дмитрий Кошелев

I had written about in-home doctor visits for Workers Comp a few years ago.  

By the way, my checkup appointment was great – other than the physician running late.   A physician running late is understandable in the current shelter-in-place environment.   The only requirements were that I check my blood pressure, heart rate, weight, and temperature before the appointment. 

A great article was written by GoodRx covered Telemedicine very well.  According to the article (find it here) telemedicine:

is not appropriate for emergency situations like a heart attack or stroke, cuts or lacerations, or broken bones that require x-rays, splints, or casts. Anything that requires immediate, hands-on care should be handled in person. However, telemedicine is very useful for simple issues and follow-up consultations.

Three Huge Advantages of Workers Comp Telemedicine 

Prescription drugs Workers Comp Telemedicine close up

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Three big advantages of telehealth appointments quickly came to mind after my remote appointment.

1.  Worksite After  Return to Work  

If an injured employee has returned to work, why remove them from their job site for a follow-up medical appointment?  Having an injured employee “return to their injury” plus having to take off work may not be the best risk management/loss control method. 

The injured employee (even remote workers) can very easily log into a web portal from anywhere with the smartphone as I did today.  

2.  Initial Instant Care For Minor Injuries 

One of my fellow consultants mentioned to me two weeks ago that Workers Comp Telemedicine firms in Missouri have sprung up at large manufacturers.  One of his clients (manufacturing plant) has used telehealth for months.  

The injured employee logs into instant access with a Doctor or nurse for injury treatment and recommendations such as coming to a physician’s in-person for further treatment.  

Of course, more serious injuries would skip the telehealth login and be seen at a physician’s office.  The very serious injuries should always be treated in an Emergency Room.   

3.  Prescription and Physical Therapy Management 

Some of the medical appointments when I was carrying a 250 file load that seemed unnecessary were prescription and physical therapy management appointments.  The injured employee must leave the worksite or their home to go to an appointment that could have been handled with a phone call.  

Could workers comp telemedicine work for these types of appointments?  Yes, they should work most of the time.  

Main Drawbacks With Workers Comp Telemedicine

Set of medical icon Workers Comp Telemedicine vector image

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The main hurdle with Workers Comp Telemedicine comes from its physical aspects.   Workers’ Compensation injuries create the need for hands-on treatment for neurological, emergency, orthopedic, or other types of treatment. 

American ingenuity will figure out how to jump over the physical component of work comp appointments.  It is just a matter of time.   

The other main drawback would for the malingerers.  Let us leave that one alone as that drawback obviously should be a concern.   

The final drawback comes from the IT area.  You need a good connection for the video.   Check out my one favorite trick that will give you 50% more router speed for your Workers Comp telemedicine appointments.  

Is Workers Comp Telemedicine Worth It? 

Workers Comp telemedicine justifies further discussion and uses if the one main drawback can be overcome in the next few years. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: telemedicine Tagged With: cuts or lacerations, GoodRx covered, large manufacturers, shelter-in-place environment, telehealth appointments

Workers Comp Humor During The Lockdowns – Working @ Home

April 30, 2020 By JL Risk Management Consultants

Workers Comp Humor Needed Now – My Major Accomplishment and The Theremin 

OK, so my attempt at Workers Comp humor or any humor may fall flat.   Well, here it goes.   Also, my method for securing toilet paper after I ran out.    BTW, I am not a hoarder.  Four packs were the minimum order.  

picture of toilet paper workers comp humor

(c) Blog Owners Work

Major Accomplishment – Hopefully Workers Comp Humor

I was convinced that the toilet paper shortage crisis was a joke unto itself.  After six different shopping trips with no luck while my supply dwindled like gasoline in the 70’s fuel crisis.  

Shockingly, some of the local stores in Raleigh had replaced their paper goods with other seasonal store items.  Uh-oh!  I had ordered delivered groceries from Aldi’s free with the first three deliveries.  I have an artificial heart valve.  I wanted to be very careful – maybe too careful = paranoid.

A search online revealed multiple gougers and overpriced suppliers.  RV toilet paper seemed to be all that was left.  Luckily, I found three rolls I had stashed for emergencies.  They were the local dollar store brand (uncomfortable) but at least I had a few left.  

I was up at 4 AM due to acid reflux – Aldi’s has great hot sauce.  I decided to try my luck at 4 AM and there it was on Office Depot – but I had to buy a large amount.  I ordered it and Voila! it arrived after a few days.  Yes, the office supply stores put a few cases online almost every morning if you are an earlier riser or a night owl.     

 

My overseas web consultant was laughing the whole time – he was the person that encouraged me to write this somewhat personal post at an attempt for Workers Comp humor.   Most other countries use bidets if available.  

The Theremin 

You may recognize the Theremin.  I tried to play one a few times.   I play guitar so I thought – how hard can this be?  It was extremely difficult.   

theremin picture workers comp

License – Wikimedia Commons- Hutschi

The Google Doodle for today is the Theremin.  The Theremin was popularized by 50’s science fiction movies and the Beach Boys. 

Google Doodle has brought back all their user-involved classics such as the cricket game that is so addictive.  

In case you want to hear a good Theremin player with an orchestra check out this YouTube link. 

So, there are your workers’ comp humor breaks for the day.  Good luck. Be safe.

 

©J&L Risk Management Inc Copyright Notice

 

Filed Under: Misc Tagged With: acid reflux, shortage crisis, supply dwindled, Theremin, toilet paper

Coronavirus Return To Work – Top 10 Issues For Workers Comp

April 30, 2020 By JL Risk Management Consultants

Pending Post Coronavirus Return To Work Issues – Top 10 Preparations   

Coronavirus return to work issues will become the buzzword phrase in Workers Comp over the next few months (rightfully so).   Any references to a return to work mean all employees except for #9 below. 

Picture Coronavirus return to work microscopic

CDC Public Use License

This complete list may not apply to your company whether you are an insurance agency, claims department, employer, safety and risk manager, etc.  

The Top 10 Issues are: 

  1. The learning curve or the accident curve.  One of the best formulas I was taught while obtaining my actuarial degree was the learning curve.  I will save you having to look at the formula.   The only thing I will say about it is that the formula involved logarithms.   Even very experienced employees tend to have more accidents when returning to work.  The machine or process that they may have used compares to starting over again. 

    Workers in protective masks coronavirus return to work and suit in laboratory

    StockUnlimited

  2. COVID presumptions AOE COE – NCCI produced a great chart on the state activities concerning legislation that will be updated weekly.  You should check that chart out – nice work NCCI.  Here is the link.  
  3. In case of a workers’ comp accident, make sure the medical facilities in your medical treatment network have enough staff to handle your injured employee(s).  Waiting for hours to be treated for an injury is not the best way to start off a claim.  This recommendation is the most important of the Six Keys.   
  4. Make sure that you are not overpaying premiums to your carrier – especially if you are returning a small number of workers to start your business up again.  If you are renewing a policy and your workforce is going to be smaller, discuss with your agent about lowering the deposit premium.  Caveat – if you start with a few employees, have your deposit premium reduced, and then fully staff, be ready for the premium audit bill.

    Businesswoman coronavirus return to work wearing H1N1 mask and holding a piggy bank

    StockUnlimited

  5. Reporting claims to your carrier or TPA – Who is now responsible for reporting your claims if your company did not staff up completely?  Does this person know how workers comp works?  Do they have a copy of your medical referral network that you use to treat injured employees? Do they have the info in #6?
  6. Carrier and TPA Contact List – Do you know who is handling your claims at this point?  Is there a new contact email or phone to reach the claims adjusters on your file?  They could be working from home which would likely change the phone number to call them.   Emails are still the best adjuster contact.
  7. Remotely starting up – if your company has decided to work remotely before actually physically going back to their workplaces, you may need all the bandwidth you can muster.  Check out this article to see how to speed up your connection by 100% with an old school trick.  This trick works.  I use it if I am hosting the webinar or video meeting.  Hint – get out a CAT-5 cable. 
  8. Traveling for work – when you have employees that drive as part of their work, #1 above will heavily apply.   Even familiar driving routes may seem different to an outside employee after weeks of not working or working out of their homes.  The learning or accident curve applies to outside workers.

    Globe wearing coronavirus return to work gas mask

    StockUnlimited

  9. Temporarily Totally disabled employees – if an injured employee was unable to return to work before the COVID crisis, how will you now return them to work if the treating physician releases them – have them work from home? Modified duty may be complicated to provide in the current environment. 
  10. Check with your legal counsel more than you did previously.   I recommend #2 above and check with your legal counselor on interfacing workers’ comp and all the new laws that are in place.  None of these 10 recommendations should be taken as legal advice.  The coronavirus return to work varies so much from state to state.  
  11. Bonus – I do realize that many businesses may not start again for weeks if not months in certain states.  Keep this list whenever your state allows your business to start up again. 

Please do not consider any of the recommendations as legal advice only as a checklist for a coronavirus return to work for your employees. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: return to work Tagged With: actuarial degree, bandwidth, legal counselor, Remotely starting up, speed up your connection, video meeting

Phoned In FROI Response To My Last Article – Excoriated

April 23, 2020 By JL Risk Management Consultants

Phoned In FROI (First Report of Injury) Reader Response To My Last Article 

A reader phoned in FROI response left an unapproving voice mail this morning.   My last article covered the First Report of Injury coding becoming very important due to COVID-related claims. 

Doctor talking on Phoned In FROI while looking at clipboard

StockUnlimited

The reader said examples of the sections in the FROI should have been included in my last article.   

The old saying – “The customer is always right” rang true in this example.   We put the rush on this article to get it in our newsletter for today.  Gulp! – deadlines! 

The WCIRB (California Rating Bureau) sent out a press release that any Corona virus-related claims will not count in any California employer’s X-Mod.   

I had recommended employers use their carrier or TPAs online claims systems.  A phoned in FROI or a paper report may cause the carrier’s data inputters to code a COVID-related claim as not related to the coronavirus.   

Two First Report of Injury Examples 

I decided to show the readers two examples of what you must fill out that make a claim considered and coded as COVID-related.     Please note these are image thumbnails – click on them to see a larger image. 

Cutout of phoned in FROI section for California WC claim

(c) CA DWC

phoned in froi cutout for North Carolina

(c) NCIC

The two are cutouts of the paper reports of injury.  The first one is from California.  The second cutout is from our HQ state North Carolina. 

The California Form 5020 covers the injury or illness a little more thoroughly than the North Carolina Form 19.  I am not sure if either state has or will devise another form or attachment to identify COVID-related claims.  

Cannot Fill Them In – Even The Examples  

Our legal advisor said that I should not fill in each for examples of how to designate them as COVID-related.  That cuts down what I was going to cover in the article.   

My advice from the last article I wrote is to try to attach the physician’s statement to the FROI if possible.   Be explicit as possible when filling out the report or if you are doing a phoned in FROI. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: First Report of injury Tagged With: data inputters, filling out, larger image, unapproving voice

First Report of Injury Coding Goes From Important To Critical

April 23, 2020 By JL Risk Management Consultants

First Report of Injury Coding Now Even More Critical Than Before

The First Report of Injury Coding now becomes something to watch for in the next five years.  Well, you should have been watching the coding before now if you had online access to your claims.   

 

Pic of keyboard person First Report of Injury Codeing

Wikimedia Commons Santeri Viinamäki

Why was a decision made to write this article?  Last week, I wrote an article on California’s WCIRB.

The article was republished quite a few times out in the blogosphere.  You may want to follow the link previous link to see the caveats and how to avoid them for any COVID-related claims in California. 

The WCIRB decided to NOT ADD IN any COVID-related claims to an insured’s X-Mod.  Yes, if the claim is related to the Coronavirus, an employer will not incur the addition of that claim to their Mod.  

NCCI will likely follow suit on not COVID-related claims not pegging to the E-Mod.   X-Mod and E-Mod represent the same term.  Most Californians refer to the Experience Modification Factor as the X-Mod.  

Two Important Areas for Proper Coding 

Hands presenting First Report of Injury Coding wed design concept

StockUnlimited

Two areas should be considered when filing a claim for the proper first report of injury coding:

  1. Do not file every claim you have as COVID-related.  This came in as a question from the article published last week.  Are not all claims related to COVID in March and April of this year?  No, do not consider them all COVID claims.   Do not reduce your integrity with your worker’s comp claims department. 
  2. Use your carrier or TPA’s online claims reporting system.  Why?  The online systems usually allow an employer to differentiate the disease claims.   In other words, you are coding the claim properly and someone in the data input department will review your input.  Carriers and TPA’s may charge a fee to input a paper claim.  

When a carrier or TPA receives the first report of injury (paper, call-in, or online), a few steps are involved for data input to release the first report of injury to the supervisor then the proper lost time or medical only adjuster.   Online claims reporting assists in the process.  (See #2 above). 

One mistake that I have seen over the years that causes much confusion originates with the treating physician not denoting the claim as a disease-based claim.   The medical only or lost time adjuster may figure this out, but rarely have I seen adjusters change the coding once the claim is set up except medical only to lost time.  

An adjuster will usually review it once for a few seconds.  I have seen four claims where the adjuster changed or requested a change to the type of coding.   

 First Report of Injury Coding Follow-up 

The easiest way to follow up in making sure the coding matches the injury (disease) involves online access.  Most carriers and TPAs have a coding section where you can review to see what coding was entered.  If you have online first report capabilities this is a simple task.    Paper loss runs make this a much more difficult task. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: First Report of injury Tagged With: disease-based claim, Most Californians, online access, report capabilities

WCIRB XMod Decision Gives Employers COVID Reprieve – Sort Of

April 16, 2020 By JL Risk Management Consultants

WCIRB XMod Decision Includes COVID-related Claims With Three Caveats 

The WCIRB XMod decision this week should provide employers somewhat of a break for incurring COVID-related claims.   WCIRB is the Workers Compensation Insurance Rating Bureau of California.

world covid outbreak map WCIRB XMOD Decision

(c) Wikimedia Public Use – Pharex Outbreak Map

A question was sent to NCCI (National Council on Compensation Insurance),  as I write this article, to see if the rating bureau for 40 states is going to do the same.   I know the answer but wanted to verify it.  Check out next week’s article to see what was discovered with my NCCI communique.  

The three caveats with on the WCIRB XMod ruling do not involve the WCIRB directly.  By the way, the WCIRB treats me very well when I have questions for their staff.  I attended their most recent mini-conference at their Oakland HQ in January.  

The three caveats involve your insurance carrier or Third Party Administrator (TPA) and the reporting employer.   Think about the situation for a moment.   What the carrier or TPA inputs from the First Report of Injury (FROI) becomes beyond critical information.   

Some readers may likely think that TPAs do not report claims to the rating bureaus.  Two of our agent clients have placed policies with carriers that use TPA’s for claims handling.   Whatever the TPA inputs the carrier reports. 

Caveats for WCIRB XMod Decision

Hand holding pencil with WCIRB XMod Decision bacteria and scientific notes

StockUnlimited

The three caveats are:

  1. The employer has to report the claim accurately as being related to COVID.  No assumptions can be made with the FROI.   If you have the treating physician’s note that relates the claim to COVID, attach it to the FROI.
  2. Even more critical, the TPA or insurance carrier MUST CODE the claim as COVID.  This is where the proverbial rubber meets the road.  No matter what occurred in the claim, if it is not coded as a COVID claim, then #1 above and #3 below will mean very little. 
  3. The physician must relate the claim to COVID-19.   Without this diagnosis and report, the claim likely will not be reported as a COVID-related claim and will peg to your XMod. 

More minor caveats exist.  The three above cover enough ground.   

FROI and Claim Verification 

How do you verify that the COVID-related claim will be excluded From Your XMod?   

  1. Have a working relationship with the claims adjusters handling your claims – you do know who they are, correct?
  2. Attach the treating physician’s note to the claim – may not be allowed in a few states 
  3. Email the claims adjuster 15 days after filing the FROI to verify that the claim is considered COVID-related 

Take the time to make sure your company or organization does not pay a higher premium after the benefit of the WCIRB COVID decision. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: WCIRB Tagged With: critical information, mini-conference, proverbial rubber, three caveats involve

COVID Compensability Conundrum – Who’s Covering What?

April 14, 2020 By JL Risk Management Consultants

COVID Compensability Conundrum – Coronavirus Causing Workers Comp Claims?

Adjusters Will Deal With COVID Claims 

The COVID Compensability Conundrum will arrive later this year when workers comp claims adjusters have to make difficult and complicated claim decisions.   

NCCI COVID Compensability Conundrum-19 Rotovirus simulation

Wikimedia – See previous author info

Most states have a disease statute.  Not many states include personal sensitivity claims in their rules and regulations.   

One of the most prevalent difficult workers’ compensation claims decisions involves the adjuster determining whether or not the alleged work comp injury or disease came from a source that exposed the claimant to a higher degree of susceptibility than just being in the general public.   

This type of claim causes much consternation between the adjuster and the injured employee when the file is denied due to the exposure not being more at work than the claimant would find in the general public.  

A cold or the flu was never accepted by any claims department that I am familiar with regardless of the job title.  

Many members of the worker’s comp press published articles over the last three weeks pertaining to First Responder coverage.   Governors are likely to order coverage for First Responders. 

 Exposed Workers

How about these workers: 

Nurse adjusting COVID Compensability mask

StockUnlimited

  • Grocery store workers 
  • Grocery delivery 
  • Pharmacy staff 
  • Bank staff – handling cash 
  • Restaurant employees – drive-thru or takeout 
  • Post office 
  • Shipping services – UPS, FedEx
  • Home care workers 

As one can see, the list goes on and on.  Determining where the exposure occurred is complicated at best.  

The adjuster’s job will become even more difficult.  How would an adjuster make this COVID Compensability Conundrum decision have more fortitude?   

Adjuster Investigation on COVID Compensability

The five main investigative tools for adjusters are:

  1. Job Description – did their job expose the claimant more to COVID than being in the general public?  Is there really a general public now with the lockdown orders? 
  2. Recorded interview – #1 above should be covered very well here
  3. Treating Doctor’s notes – the person has to have a COVID diagnosis – did the physician relate it into the job – extremely important. 
  4. First Report of Injury – an often overlooked investigative tool 
  5. Initial discussion with the employer – for obvious reasons

Do not be surprised if the Governors /Insurance Commissioners create orders to pay for COVID work comp claims 

As we all sit home and wait to go back to the office, or work harder telecommuting – I thought this quick article on the COVID Compensability Conundrum would cause claims departments to start thinking about these types of claims as more people are tested over the next few weeks. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: claims department Tagged With: disease statute, First Responders, Grocery delivery, higher degree of susceptibility, lockdown

COVID-19 Pandemic Statistical Madness Rears Its Ugly Head

April 3, 2020 By JL Risk Management Consultants

COVID-19 Pandemic Statistical Madness – Whose Numbers Are Correct?

The COVID-19 Pandemic statistical madness has reached epic proportions.   I usually do not stray from Workers Comp articles.  That is why you read this blog and the newsletter.   However, the recent numbers flashed on screens across the world gave me pause.  

simulation of COVID-19 Pandemic Statistical Madness

Wikimedia Public Use License – Graham Beards

I usually quote a large number of statistics such as X-Mods, LDF’s, and other organization’s studies.   Those numbers, except for a few organizations, are usually static.  They vary a small amount.  Typically, the rating bureaus and the BLS provide great numbers.  

The White House’s press briefings were based in solid numbers until the models were unveiled over the last 10 days.  Models and predictive analytics go together.   I am a fan of neither as the numbers can change quickly when covering any type of datasets.  

One example of models that are supposedly magically correct is the hurricane models.  The graphic below shows the variance in the predictions of hurricanes from 2012-2016.  If the forecasters were accurate, then the line would be flat-lined at zero.   This graphic is not the case.  

Graph of Hurricane Prediction COVID-19 Pandemic Statistical Madness

(c) Five Thirty Eight

The associated article to the above graph can be found here.   One quote from the article that jumped off the screen was:

…..hurricane models are not good at predicting rapid intensification events such as Maria because so few of them occur. 

You are asking, wait – your article title refers to the coronavirus, but now we are on hurricanes?   Take a look at the same organization’s article on COVID-10 pandemic statistical madness.  Check it out here, no really – take a look and my article will start to make sense.  

Chart after chart in that article shows that the COVID-19 experts disagree significantly on the Coronavirus statistics.  COVID-19 remains a rarity, so knowing the outcomes compares to forecasting a hurricane.   

My suggestion is to keep an open mind when the barrage of numbers starts every morning on COVID-19.   Check out the Google Doodle on any Google Search Page 

for a great mini-guide on and avoid the COVID-10 Pandemic Statistical Madness.  

 

©J&L Risk Management Inc Copyright Notice

Filed Under: statistics Tagged With: barrage of numbers, predicting rapid intensification, predictive analytics, supposedly magically

Workers Comp Medical Network Penetration Increases Utilization Costs

April 2, 2020 By JL Risk Management Consultants

Workers Comp Medical Network Penetration Means Higher Use – NCCI Study 

A recent NCCI Study indicates that a higher Workers Comp medical network penetration rate results in a higher rate of utilization.   Check out the study here on their website.   The study reads as a little complicated, but bear with the study.  The details are worth the read and your patience.   (NCCI > National Council on Compensation Insurance).  

Woman with book Workers Comp Medical Network studying at desk in library

StockUnlimited

Blog and newsletter readers will benefit from reading the whole study and drawing conclusions from it.  NCCI verified what I had been saying for over a decade.  When the prices of workers comp treatment decrease, such as an adjustment in a state fee schedule, utilization increases.  

The definition of network utilization is the quantification or description of the use of services by persons for the purpose of preventing and curing health problems, promoting maintenance of health and well-being, or obtaining information about one’s health status and prognosis.

The focus word here is quantity.  

Previous Studies Had Same Conclusion  

Many articles have appeared in J&L’s blog over the years on this subject.   I have performed studies for physical therapy groups, medical networks, carriers,  TPA’s and investment groups on the use of medical networks.  One of the by-product conclusions was that utilization offsets price when comparing the two variables.    

According to NCCI – 

…a higher proportion of in-network claims in a state relates to comparatively greater utilization of services for in-network claims. In turn, this associates greater network penetration with greater utilization of services to treat in-network claims, compared with out-of-network claims.

Missouri Has Highest Network Use At Highest Cost??

Let us see each state’s Workers Comp medical network penetration rates.  One of the more interesting states in the below chart is Missouri.   Last week, J&L produced an article on the extremely high costs of medical care in the Show Me State.  Missouri has the highest use of medical networks in the nation.   Why are the costs so high if the Missouri medical network penetration rate is the highest?

My best estimate would be that the medical costs are so high in Missouri (304% above the median state) that the medical network price may still be high.  The use of the medical network is very high due to carriers and employers attempting to reduce medical costs.  The graph below and the one in the previous article on Missouri medical costs point this out exactly.     

Graph of NCCI Chart Workers Comp Medical Network Penetration

(c) NCCI – All Rights Reserved – click chart for higher resolution

Click the chart for a better resolution.  The bubble charts on pages 28 and 29 of the NCCI study on workers comp medical network penetration summarize the points very well.   

 

©J&L Risk Management Inc Copyright Notice

Filed Under: medical networks Tagged With: prognosis, promoting maintenance, utilization increases, utilization offsets price

Workers Comp Webinar Mini-Guide Prep – Other Ideas

March 26, 2020 By JL Risk Management Consultants

Workers Comp Webinars – Other Suggestions

I published an article on Workers Comp Webinars and how to have the best online experience two days ago.   The blog readers sent me a few article links.   One similar article I found was great, but then it disappeared from the Google rankings.  

To fill in the missing article’s space, I decided to use a Consumer Reports article that had the same suggestions.   

One of the most popular suggestions was not to crank up the microwave while you are on a webinar or video meeting.   The one tip I disagree with in the article is switching everything to 5 GHz.    5GHz struggles with penetrating walls and other obstructions.  

My suggestion to move closer to your router or better yet, hook a CAT5 cable from your notebook or desktop directly to the back of your wireless router.  Windows 10 should set up the connection quickly.   The back of your wireless router should look similar to this one. 

hook into Cat5 workers comp webinars

Public Use License – FelipeTD~enwiki

You want to hook into the LAN  slots, not the WAN slot.  

You may have CAT5 cables in your home already instead of rushing to the local computer supply store.   The ends of the cable look like this for reference.

Cat5 Cable Workers Comp Webinar

Wikimedia Public Use License – Fo0bar

One caveat is that you may need to turn off your computer’s wireless access if you are hooking directly into the router.  You will be amazed at the speeds versus the wireless connection. 

My CAT5 direct connection doubled my speed.  Remember, when it comes to webinars, there is only so much data that the webinar provider can output.  The same goes for multi-participant video chats.   

I presented a 1.5-hour webinar using one of the popular platforms for a customer last November.  I had my notebook attached directly to the office’s wireless modem for the fastest speed possible with approximately 10 participants.  I had no problems with the webinar. 

 I still have the same wireless router that I bought on Woot! two years ago for less than $50.  You do not have to spend a ton of money on a wireless router, or you may be renting from your ISP, which is OK, but more of an expensive option.  

Check out my recent eBay search for routers – the first one up has 4.5 star rating for less than $50.  

Clark Howard always recommends that you call  (or chat) your  ISP (Internet Service Provider) to see if you can get more speed.   ISP’s will often upgrade you for little or no extra fees if they think you are going to switch providers.  

If you feel this is too techie,  then your current settings may work fine.  Good luck with your Workers Comp webinars. 

 

©J&L Risk Management Inc Copyright Notice

 

Filed Under: Webinar Tagged With: CAT5 cable, desktop directly, ISP, wireless access

Your Mini-Guide For Workers Comp Webinars – Be Prepared

March 24, 2020 By JL Risk Management Consultants

This Mini-Guide For Workers Comp Webinars Will Save You Headaches Later 

My IT background made me think of creating a Mini -Guide to Workers Comp Webinars.  You can use this as preparation for attending any webinar. 

bandwidth graph workers comp mini-guide for workers comp webinars

Public Use License – Matthieu James Author

 

 If you are using a work computer, check with your IT department before instituting anything on this Mini-Guide For Workers Comp webinars list.  Many work-based computers have sets of software that may cause problems in a very small % of users.

If you are not familiar with the following suggestions – do not do them, or look at your online manual for your modem and ISP (Internet Service Provider).  

OK, so many of the conferences have now turned into webinar-type symposiums such as the recently posted NCCI Conference on May 12th.   With a large number of participants, you are going to need all the bandwidth your home system can muster.   

Business people using laptop Mini-guide for workers comp webinars during meeting

StockUnlimited

This guide assumes you have to access the webinar from home.  

  1. Before the webinar starts, turn off all devices accessing your home modem (Roku, phones, other computers, etc.).   You will increase your bandwidth quickly. 
  2. Four hours before the webinar starts, turn off your modem and wireless router and restart them.   This method will allow your modems to kind of do a self-clean.  
  3. Just before the webinar, move as close as possible to your wireless router.   2.4 GHz travels farther.  If you are on 5 GHz (much faster), the signal does not go through walls, etc. very well. 
  4. If you want the fastest possible bandwidth, use a CAT5 cable and hook it directly into the back of your modem.  Now, you have big-time bandwidth.  
  5. Run this test to see how fast your system is feeding your computer data.    Zoom, GoToMeeting, etc. require minimum bandwidth to operate.  My results can be found here.  I am OK, but I have to remember that the presenter’s bandwidth plays into the equation.  I had to upgrade my modem a few months ago.  More on that later.   

    Close-up view of Mini-guide for workers comp webinars using laptop

    StockUnlimited

  6. If your numbers from the test in #5 are too low for Zoom, GoToMeeting, then your webinar experience will be significantly diminished.
  7. If you are a presenter, you are going to need more bandwidth than you expect to use for your presentation.   I went through a webinar where my modem kept disconnecting.  I had to use my cellphone to finish the audio portion.  I upgraded my wireless router the next day.  
  8. Chat with or call your ISP if your numbers are low.  I switched to Earthlink to get my bandwidth up a few years back.  They added an extreme service for an extra $5 per month.  No more problems popped up after that upgrade. 
  9. Two hours before the webinar, test your system with the webinar provider, if possible  Skype Testing.   Zoom Testing Page   GoToWebinar Testing 
  10. If you are going to video chat with your fellow employees, you will need quite a bit of bandwidth if there are more than two participants.   Check with your employer’s IT department for any specifications or tips. 
  11. Malware and Virus checkers used to interfere with webinars, now, not so much.  The malware, spam, and virus checkers have realized that their software cannot block or hinder webinar participation.
  12. My VPN (Virtual Private Network) does slow down my data rates.  If you are sitting at home and then tunnelling to a server in another part of the country, then your bandwidth will suffer if that remote server is slow.   Run the #5  test through your VPN to see if it is fast enough for an excellent webinar experience.
  13.  Do not turn off your virus, malware or VPN services due to #11 and #12 – especially your virus/malware software.

    Hands presenting Mini-guide for workers comp webinars computer shield

    StockUnlimitied

  14. Only have the tab for your webinar open, other tabs can affect your webinar.  I have not tested all the browsers for speed. 
  15. If you are thinking of hosting a webinar, then this page will help.  
  16. All the above applies if you are going to access the webinars with a phone or tablet.  Just make sure that you can access the webinar through a modem.   I paid an extra $22 to my phone service provider for data due to a 1.5-hour webinar that my service switched from my work modem to my phone’s data service.  (ouch!)  I have since learned to turn off my data to keep the webinar going through the modem. 
  17. Finally, is your phone, tablet, or desktop/laptop fast enough to handle a webinar?  I had to jettison a 3-year-old notebook as it was not fast enough even after a RAM and SSD update.   
  18. Bonus – if the webinar has problems, give them a few minutes before dropping the webinar.   Webinar providers can usually recover in less than 10 minutes. 
  19. Choose your webinars well.  There are going to be tons to choose from until the coronavirus situation resolves.   You can be picky. 
  20. Check to make sure the webinar is still scheduled on the expected date and time.  I found out the hard way that current webinars may be moved to May or June.   I had one this week and one last week where the webinar was understandably delayed to June.   I tried to sign on when I should have paid attention to their emails canceling the webinars.  

If you feel the above list is too complicated or you do not feel comfortable adjusting your computer, modem, etc., then do not do it.  Sometimes, leaving well enough alone provides a good webinar experience. 

I hope this mini-guide to workers comp webinars was helpful to you – good luck.

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Webinar Tagged With: coronavirus situation, GoToMeeting, presenter's bandwidth, RAM, significantly diminished, SSD, Zoom

NCCI Virtual Annual Issues Symposium Free – May 12th – Sign Up Now

March 24, 2020 By JL Risk Management Consultants

NCCI Virtual Annual Issues Symposium With Powerful Free Webinar – Sign Up – It’s Freebies! 

The NCCI Virtual Annual Issues Symposium replaces the annual in-person symposium.  The great news – NCCI will not be charging a fee for one of the top  Worker’s Comp Symposiums. 

Portrait of excited business people NCCI Virtual Annual Issues arm raised in the sky

StockUnlimited

Dr. Rober Hartwig will present on the effects of the Coronavirus on The 2020 Recession.  I have attended a few sessions where Dr. Hartwig presented an unusual angle on Worker’s Comp.  This session should be no different. 

Barry Lipton (NCCI Actuary) always asks great questions at the annual WCRI Conference in Boston every year. 

You can find the agenda here. 

Please see Sign up link at the bottom of the article.  Yes, you have to register.

NCCI AIS Symposium Presenters 

The speaker bios are below.   

Bill Donnell, CPCU, President and CEO, NCCI

Group of NCCI Virtual Annual Issues business people

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Bill Donnell is president and chief executive officer of NCCI, a trusted source of workers compensation information. Under his leadership, NCCI serves nearly 40 state governments and more than 900 insurers, providing data, insights, tools, and services that foster a healthy workers compensation system. Donnell is an accomplished executive leader with more than three decades of industry experience specializing in property/casualty (P/C) insurance/reinsurance in both global and domestic US leadership roles. Prior to joining NCCI, he was president of Swiss Re’s P/C reinsurance business. He is a noted insurance industry subject-matter expert and speaker.

Donna Glenn

Donna Glenn, FCAS, MAAA, Chief Actuary, NCCI

Glenn leads the Actuarial & Economic Services Division of NCCI. Her team helps maintain a healthy workers compensation system through the design and delivery of all actuarial and economic work at NCCI. The team produces rate/loss cost filings and conducts legislative analyses, compiles and analyzes insurance industry results, establishes residual market reserves, and creates actuarial tools, analytics, and research. Prior to this, Glenn led casualty product and underwriting for the national insurance business segment at Liberty Mutual, where she oversaw workers compensation strategy for both guaranteed cost and loss sensitive business. She has also held positions at The Hartford, Travelers, and Deloitte, with focus areas ranging across product management and pricing strategy including predictive analytics, business intelligence, and data management. Glenn graduated from Quinnipiac College with a bachelor of science in computer science and mathematics. She is a Fellow of the Casualty Actuarial Society. She previously represented Liberty Mutual on several industry boards including: the New York Compensation Insurance Rating Bureau (NYCIRB), the Pennsylvania Compensation Rating Bureau (PCRB), the Minnesota Workers Compensation Insurers Association (MWCIA), and the Workers Compensation Research Institute (WCRI).

Robert Hartwig, PhD, Clinical Associate Professor of Finance,
Darla Moore School of Business, University of South Carolina

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Robert Hartwig is clinical associate professor of finance and co-director of the Risk and Uncertainty Management Center. His research focuses on insurance markets and structures, risk management, risk-bearing capital market instruments, the financing of technology risks, and venture capital in insurance markets. He makes frequent presentations to insurance industry management, boards of directors, regulators, and legislators. Prior to joining the Darla Moore School of Business, he was president and economist for the Insurance Information Institute. In prior positions, worked for Swiss Re, NCCI, and the US Consumer Product Safety Commission. He has also served as an adjunct professor at Florida Atlantic University. His other professional experience includes expert witness testimony and testimony before numerous congressional and state legislative committees. He holds the Chartered Property Casualty Underwriter (CPCU) credential and speaks frequently in the media on all issues related to insurance markets.

Barry Lipton - 2020 NCCI Virtual Issues Symposium

Barry Lipton, FCAS, MAAA, Practice Leader & Senior Actuary, NCCI

Professor writing NCCI Virtual Annual Issues whiteboard

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Barry Lipton leads NCCI’s research and presents regularly before insurance industry groups on critical issues such as medical cost drivers, developments in NCCI’s actuarial methodology, and current workers compensation trends. Before joining NCCI, Lipton worked for the Fireman’s Fund Insurance Company as vice president and as an actuary in the claims division. He has extensive experience as a commercial lines pricing actuary, including workers compensation, liability, and property insurance. Lipton is the author of “The Use of Networks to Care for Injured Workers—What’s Been the Impact?” and “Comparing the Quantity and Prices of Physician Services Between Workers Compensation and Group Health.” He presented “Work Comp vs. Group Health—The Price We Pay” at NCCI’s Annual Issues Symposium 2019.

Raji Chadarevian, Director, Medical Regulation & Informatics, NCCI

Raji Chadarevian leads a team of actuaries responsible for pricing proposed and enacted changes to laws and regulations governing medical benefits in workers compensation in all NCCI states. With more than 20 years in the workers compensation field, he is NCCI’s primary actuarial expert on matters relating to medical data and workers compensation health informatics. Prior to 2012, Chadarevian was responsible for several state rate filings, including Montana, New Mexico, and Oregon. Chadarevian is the principal author of “How Is Medical Inflation Measured? And Why Should I Care?” and “Killer Pain Relief: Opioids in Workers Compensation.” He recently co-authored a presentation on “Game Changers and the New Workplace” at NCCI’s Annual Issues Symposium 2019. Chadarevian received a bachelor of science in mathematics from the University of Southern California in Los Angeles.

Sign up here.

(c) Copyright (images and text) NCCI Holdings – used with permission. 

See you (sort of) at the 2020 NCCI Virtual Annual Issues Symposium – May 12th, 1 PM Eastern. 

 

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Filed Under: NCCI Conferences Tagged With: 2020 Recession, accomplished executive, Barry Lipton, CPCU, Deloitte, Physician Services, Raji Chadarevian, symposium

WCRI Prior Recession Report – The COVID-19 Economic Recovery

March 18, 2020 By JL Risk Management Consultants

WCRI Prior Recession Report Shadows The COVID Economic Situation

WCRI Prior Recession Report and COVID comparison 

NCCI COVID-19 WCRI Recession Report

Public Use License – See prior graphic

Dr. Savych has published many reports on the post-return-to-work attitudes of injured employees. 

I received this email today from WCRI.  The report may be worth a look.   WCRI also offers a free medical pricing report that will pop up when you go to their website. 

At the same time, these measures are expected to be of limited duration and the economy may rebound quickly after the restrictions are lifted. Longer-term unemployment may be limited due to the possible quick turnaround, though this observation is tempered by the possibility that the temporary closures will remain permanent for some businesses. So, the results of the WCRI study summarized below, while instructive, hopefully, will have limited applicability to the current situation.

Recession, Fear of Job Loss, and Return to Work – The study is located here. 

The study identifies two different channels of the impact of a recession on return to work of those injured at work:
• Direct effect: Workers seeking to return to work might find that job opportunities are scarcer and that return to work is delayed.
• Indirect effect: Workers may fear job loss if they do not return to work, so they may try to hasten that return to work.

The study used WCRI’s Worker Outcomes Surveys prior to the Great Recession to evaluate how variations in the local unemployment rate affect return to work of those injured at work through the two channels identified above. The workers in these surveys were out of work due to injury for more than 7 days, a group more likely to feel the impact of a recession on return to work. The study asked what would be the impact on longer-term unemployment of doubling the unemployment rate from 5 to 10 percent. Longer-term unemployment is defined as not returning to work within 2.5 years after injury.

The study showed:

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• Direct effect:   Doubling the unemployment rate increases the percentage of injured workers experiencing longer-term unemployment from 14.7 percent to 18.7 percent due to lack of available job opportunities.

• Indirect effect:   At the same time, doubling the unemployment rate increased the percentage of workers fearing job loss when injured from 35.5 percent to 51.3 percent. This increased fear of job loss resulted in an increase in the percentage of injured workers avoiding long-term job loss of 1.6 percentage points. This offsets the direct effect of the unemployment rate increase.

The net effect of an increase in the unemployment rate from 5 to 10 percent is to increase longer-term unemployment from 14.7 percent to 17.1 percent, or 16 percent.

The study also considers other scenarios where the impact of a recession on the fear of job loss and resulting worker response is even greater than measured in the data (perhaps because the data were collected prior to the Great Recession). In these scenarios, the probability of longer-term unemployment increases to a lesser extent than the net effect described above.

Usefulness

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The report may be useful to those who are trying to predict the impact of the current recession on return-to-work interventions and outcomes, as well as on workers’ compensation claims and costs—especially for income benefits. It may also be relevant for predicting the impact of an economic recovery. As the economy strengthens and the unemployment rate falls, there will be more job opportunities, less fear of job loss, and perhaps less aggressive efforts by injured workers to seek reemployment.

Key findings:

Workers who are afraid of being fired are less likely to become longer-term unemployed after an injury. These workers may be more aggressive in seeking return-to-work opportunities, making an extra effort to return to work earlier or to take steps to increase their chances that their job will exist after return to work.
Injured workers in areas with unemployment rates that are rising or that are higher than normal for the area are more likely to fear losing their jobs. The greater the fear, the more likely it is that workers will more actively pursue returning to work, thus reducing the number of workers that experience longer-term unemployment.

Recession, Fear of Job Loss, and Return to Work. Richard A. Victor, Bogdan Savych. April 2010. WC-10-03.

 

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Filed Under: WCRI Tagged With: COVID, fear of job loss, limited applicability, restrictions are lifted, study summarized

Missouri Workers Comp Medical Treatment Very Expensive – NCCI Study

March 18, 2020 By JL Risk Management Consultants

Missouri Workers Comp Medical Treatment 304% More Expensive Than Health Insurance

I forgot to finish this article on Missouri Workers Comp medical treatment that I started at the WCRI Annual Conference two weeks ago.   The comparison is still worth examining for medical costs.   

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NCCI (National Council on Compensation) Insurance headquartered in Boca Raton, FL decided to compare health insurance costs to worker’s compensation medical treatment.  

WCRI and NCCI have compared health insurance costs to Worker’s Comp in the past.   Check out these articles on those studies. 

Health Insurance Treatment Costs Less 

Will No Health Insurance Cause Case Shifting?

The NCCI study can be found at this PDF.   The study is worth a  review and a download.  I usually look for any anomalies or outliers.  Why?  Because that is what I do in my articles. 

The NCCI study had changed from before in a few areas including the reduction of radiological study costs.   

The one outlier that jumped off the page came from the “Show Me State.”  Missouri Workers Comp medical treatment costs, when compared to health, appeared as almost an outlier.   

Jurisdictions included in the study were AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MO, MS, MT, NC, NE,
NH, NM, NV, OK, OR, RI, SC, SD, TN, UT, VA, VT, and WV.   A comparison of 37 states is rather comprehensive. 

Most of the states that had no medical fee schedules were more expensive.   Medical fee schedules have been covered in the following recent articles.      

  • WCRI Study
  • Fee Schedule Hidden Benefit
  • Download Free Study on Fee Schedules 

NCCI used relativities which were likely the best way to compare the data.   NCCI covered price and utilization as the two relativities.   Check out page 7 of the study for a nice summary comparison.  

Missouri Workers Comp Medical Treatment NCCI Study

(c) NCCI, Boca Raton, FL – All Rights Preserved – Please click on chart for higher resolution

Please click on the chart for better resolution. 

The Missouri Workers Comp medical treatment excessive cost and utilization stand out very quickly in the above chart.    How should we assess the 300+% relativity when compared to health insurance costs?  

As mentioned earlier, Missouri has no fee schedule in place.  States without fee schedules are usually more expensive for Workers Comp.  The utilization component in the second column means the number of visits and tests performed occur much more when compared to health insurance.  

The next time Missouri Workers Comp Medical is covered in an article by me, hopefully, the state will have enacted medical cost reductions. 

 

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Filed Under: Missouri Tagged With: excessive cost, headquartered, Hidden Benefit, radiological study, summary comparison

NCCI COVID-19 Article And Claims Compensability Debate

March 11, 2020 By JL Risk Management Consultants

NCCI COVID-19 Article Addresses Compensability (Sort of) 

A recent NCCI COVID-19 Article (Coronavirus) caught my eye.  I have not seen a rating bureau analyze compensability whatsoever.  Why? 

NCCI COVID-19 Rotovirus simulation

Rotavirus – Public Use License – Graham Beards

NCCI is the acronym for the National Council on Compensation Insurance.   They are the rating bureau for approximately 35 states.  

NCCI has always been very helpful and professional in my dealings with the organization.  This article is not meant to berate their article released today.   The NCCI COVID-19 article sparked my memory on these types of very complicated and difficult to adjust claims. 

Rating bureaus do not review claims for compensability.  That comes from each state’s Workers Comp Commission’s rules and regulations.   Check out the NCCI press release here.    They concluded that “it depends,”  which can be said of any injury in any state.  

Personal Sensitivities

Personal Sensitivities and Exposure to the General Public has long been debated in claims offices around the country.   A few articles on this very subject has appeared in this blog.   

Personal sensitivities caused me to receive more than a few angry calls over the years when, usually, a medical-only claim was not paid under Workers’ Comp due to someone having a personal sensitivity to their environment.   Please note this varies from state to state.  

If you follow the link in the preceding paragraph, a viral (no pun intended) appeared in this blog in 2018 on personal sensitivities.  The dish detergent personal sensitivity claim caused many debates on paying what was a small physician’s office bill or denying it.  

Exposure To The General Public

Blowing NCCI COVID-19 woman nose

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Exposure to the general public refers to determining a claim that involves a disease or condition that the claimant may have been exposed to outside of work.    Would the NCCI COVID-19 passage in the article refer to something that an employee contracted outside of work or not performing their job duties?   

NCCI may have had it correct when they said: “it depends.”  If an employee contracts COVID-19, can it be proven that it occurred while furthering the interests of their respective employer?  The decisions by a claims department may grow very complex when trying to find the source of the disease. 

Exposure to the general public means the employee was exposed or could have been exposed while out in the general public, and not necessarily due to contracting a disease at work.   

If you are interested, the best chart for following the COVID-19 outbreak, not surprisingly, comes from Johns Hopkins University at this link.   

Complex Decisions

Workers’ Compensation adjuster jobs were complex enough before having to make a COVID-19 accept/deny decision.  I have not seen any carriers produce blanket statements yet. 

 

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Filed Under: NCCI Tagged With: complicated and difficult, dish detergent, grow very complex, preceding paragraph, regulations

WCRI Day Two Conference – Morning – What I Learned Today

March 10, 2020 By JL Risk Management Consultants

What I Learned Today at the WCRI Conference – 2020 

I decided to split out the Mental Health Session into its own article.    

State of the States Selective Findings

Benchmark WCRI Conference 2020 at 78 magazine lane

Wikimedia Commons – Rodhullandemu

This session features selective findings and trends seen across WCRI’s core benchmark studies, including our 18-state CompScope™ Benchmarks reports, a multistate benchmarking program that measures the performance of a growing number of state workers’ compensation systems.  One set of findings will focus on readmission and reoperation rates as seen below.

Hospital Inpatient Metrics – Carol Telles, WCRI

Inpatient Hospital Payments account for 17% of Total Hospital Payments 

Long Term Decrease in Hospital Inpatient Payments 

Share of cases with 20,000 or less decreased, 20,000+ increased 

Major surgery rate decreased 6 – 7 %  2017 to 2019 

Iowa, Louisiana, and Massachusetts had increases in inpatient with surgery 

Inpatient reimbursement rates – Indiana Minnesota and North Carolina had reductions from 2010 – 2017 

Readmission and Reoperation Rates among Workers’ Compensation Patients

According to the Centers for Medicare and Medicaid Services, two of the main indicators of surgical quality are whether patients are readmitted or reoperated upon after a surgical procedure.

The parts of WCRI Conference 2020 Lumbar

Wikimedia Commons – Anatomist90

However, the research on these important indicators is limited for workers’ compensation patients who undergo lumbar spine surgery. In this session, we share preliminary research on this important topic.

Questions Addressed:

  • What are the readmission and reoperation rates in workers’ compensation for lumbar spine surgery?
  • How do these indicators vary across states as well as compare with other payor groups?
  • What are the implications of these indicators for payors, injured workers, policy makers, health care providers, and regulators?

Readmission and Reoperation Rates  – Dr. Randall Lea, WCRI  

Two main markers of quality by non-WC payors 

Readmission – unplanned hospitalization after a patient has been discharged 

90-day timeframes in the study

Discectomy and Fusion were the two surgeries studied 

Fixable/curable vs. non-fixable/manageable 

Dr. Rebecca Yang – WCRI 

Used the CompScope usual 18 states 

72% of patients had a discectomy 

28% had fusion 

Studied 30,000 claims – 11% of patients with low back conditions had surgery 

5.5% reoperation, 5.5% readmission, 4.9% both reoperation and readmission

California had 22% reoperation or readmission rate

7 – 8% of lumbar surgery cases had reoperation or readmission within 30 days and 90 days of surgery 

7.2% had readmission or reoperation within 30 days. 

56.4% decompression 43.6% fusion – reoperation rates 

With no readmission or reoperation, $33,775 discectomy  $90,614 fusion

With readmission and reoperation $120,472  discectomy  $144,272 fusion 

 

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Filed Under: WCRI Annual Conference Tagged With: 90-day timeframes, Discectomy and Fusion, readmission, reoperation rates

Prioritizing Mental Health for Workers Injured On The Job – WCRI Session

March 6, 2020 By JL Risk Management Consultants

I decided to place this session by itself as I had written on this session last week. 

Dr. Boden – Suicide and Opioid Mortality Related to Workplace Injury 

Injured Worker Mortality in New Mexico   

  • Women – Lost time injured -10%
  • Men – Lost time injured – 16%

Suicides and Opioids result in more deaths than auto accidents

Drug-related and suicide deaths within 20 years after injury – 300% higher in women

A study from West Virginia – same results 

Injured employees had a very heavy tendency for opioid dependency 

40% increase in depression post-injury lost-time claims

Injury prevention is tantamount. 

Mr. Callahan – MA Building Trades Council 

  • 93% male workforce
  • If you do not work, you do not get paid 
  • A lot of addiction due to return to work issues, need to work 
  • Peer-to-peer advisors have been successful 

Mary Christensen – Southern CA Edison 

  • Advocacy program – 360-degree outlook 
  • EAP provider teaming with claims department for services offered by EAP 
  • Non-occ claims reps brought in for training 
  • Identifying stuck employees 

Dr. Larsen – New England Baptist Hospital 

  • CBT Cognitive Behavioral Therapy – coping skills 
  • Pre-frontal therapy never addresses the limbic system 
  • Limbic approach EMDR- Rapid Eye Movement treatment 
  • Reteach breathing to lower stress 
  • Sense of learned helplessness <<<I have seen this often in Workers Comp claims >>>
  • Lew Millender, MD – Baptist Hospital – if you care about your patients, they will return to work faster 
  • Field Case Manager – Rehab Nurse on file always makes the file turn out better <<<my favorite WC Risk Management Technique>>>> 
  • Return to work always has to be the goal 
  • Trauma theatre – rewind effect of the trauma 
  • Physical therapists are invaluable to the psychological recovery 

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Filed Under: WCRI Annual Conference Tagged With: 93% male workforce, Cognitive Behavioral Therapy, Mr. Callahan, Trauma theatre

WCRI Annual Conference 2020 – Aging Workforce Claims

March 5, 2020 By JL Risk Management Consultants

How Injuries, Claims and Outcomes Change with Age – Dr. Bogdan Savych 

Baby boomers for Aging Workforce climate action

Wikimedia Commons – Takver

The age distribution of the workforce is projected to change in the next 10 years. The large cohort of baby boomers will have largely retired, shifting the age distribution toward younger workers. 

In this session, we will help frame the potential impact of this shift on the workers’ compensation system by providing a multi-dimensional picture of how claim characteristics and outcomes vary with age. In particular, we will examine how injury rates, claim costs, contributors to claim costs (such as utilization of medical care, and duration of disability), and outcomes differ by age.

Questions Addressed:

  • How do rates of non-fatal and fatal injuries vary by age? Do the events causing injury differ by age?
  • How do medical and indemnity payments per claim vary by age and are these variations related to the different injuries sustained by workers of different ages?
  • How do worker outcomes—such as return to work, access to care, and satisfaction with care—vary by age

Presentation

In 2030 over 20% of the workforce will be Senior Citizens 

BLS > Older workers are more likely to remain working > 12% over 75 years old 

65+-Year-old workers are among the least injured age groups 

Older workers are more likely to have falls, slips, and trips. 

Sprain type injuries are very low for 65+ age group

Cut injuries decrease with age

Hip, upper extremity and leg fractures increase with age 

Medical payments increase with age for claims with more than 7 days lost time

Neurological injuries (very expensive) increase with age then decreases at about 50+ years 

Indemnity payments decrease at 55 years+ with the lowest for 65+ age group

Pre-injury weekly wages decrease sharply for 65+ age group 

Variation in Outcomes by Age 

65+ age group possess a larger amount of comorbidities > as expected 

65+ age group had fewer problems receiving provider services 

 

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Filed Under: WCRI Tagged With: large cohort, leg fractures increase, multi-dimensional picture, Sprain type

Should Workers Comp Psychological Injuries Count As Claims?

February 28, 2020 By JL Risk Management Consultants

The Complicated World of Workers Comp Psychological Injuries

One subject that has long been the bane of claims adjusters is workers’ comp psychological injuries. 

picture of Sigmund Freud workers comp psychological injuries

Earlier this week, I included mention of a session at the upcoming WCRI Annual Conference on mental injuries resulting from an on the job injury.   Please do not think that I disbelieve or have never accepted a resulting mental injury from a Workers Comp file. 

I have accepted and paid benefits on Physical> Mental claims.  A brain-injured claimant can easily have mental concerns for many years after a Workers Comp injury.   These types of claims baffle many new adjusters.  

Two schools of thought exist in many claims departments.  One opinion is that no psychological injuries should be accepted on any claim unless a very extreme circumstance exists on the claim. 

Some state Workers Comp courts have ruled that psychological injuries should be accepted in some cases including a mental injury that results from no physical injury.

The four types of injuries in Workers Comp are:

  • Businesswoman Workers Comp Psychological Injuries lying unconsciously

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    Physical > Physical – an employee physically injures themselves which results in a physical injury that must heal over time. This type of injury is the most prevalent in Workers’ Compensation.  If a treating physician deems a person to be unable to return to work, and the claim is considered compensable, then the applicable benefits are usually paid on the claim

  • Physical >Mental – an injured employee incurs a psychological injury from the aspects of an on the job injury. This type of injury comes from the physical >physical injury in the previous bullet point.  Many claim departments remain, staunch defenders, that no mental injury results from a physical injury.  Many claim departments bristle when asked to pay for psychological benefits.   One can find many cases where a Workers Comp court decision was rendered where mental injury benefits are ordered paid to the claimant.  This remains a strong point of contention in some files.
  • Mental > Mental – the most complicated type of claims for adjusters to handle consists of an employee having a purely mental claim from the workplace. Some Workers Comp courts have ordered benefit payments on mental > mental claims.  Workers Comp claims departments usually litigate these types of files before payment.  Many of these types of claims are appealed if the claimant or insurance carrier does not prevail in litigation.   
  • Mental > Physical – a very rare file where a mental injury results in a physical injury. The one main controversial area with this type of claim is Reflex Sympathetic Dystrophy.   The definition of RSD has changed over the last few years to include Complex Regional Pain Syndrome.   A claims adjuster may never see this type of injury in their career

Please remember that I am writing this article in laypersons terms from my own experience and the experience of my co-workers over the years.   I am giving no medical advice concerning Workers Comp psychological injuries. 

 

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Filed Under: Workers Comp System Tagged With: claims baffle, layperson, psychological, Reflex Sympathetic Dystrophy

Workers Comp Psychological Aftereffects – WCRI Conference Next Week

February 26, 2020 By JL Risk Management Consultants

Workers Comp Psychological Effects – WCRI Session Next Week 

Workers’ Comp psychological effects are one of the unmentionables that the industry never really considers at the time of a claim. 

workers comp psychological effects phrenology

Public Domain

One of the unmentionables that receives little consideration in Workers Comp is the effect that the claims process has on the injured employee.   No, I am not saying that carriers should have to treat the psychological components of a claim – better known as:

Physical >>>> Mental   

One question we have to ask is what happens to the injured worker once they file a claim and after the claim has been closed?  

WCRI Prioritizes Mental Health for Workers Injured on the Job at 2020 Conference

Cambridge, MA, January 30, 2020 ― The Workers Compensation Research Institute (WCRI) announced today that a panel at its 36th Annual Issues & Research Conference, March 5–6 in Boston, MA, will discuss the mental health challenges some workers face after a workplace injury, as well as initiatives to address those challenges.

“Serious workplace injuries can lead to anxiety, depression, and other mental health issues,” said John Ruser, president and CEO of WCRI. “Indeed, new research from Boston University (BU) Professor Les Boden found that an injury serious enough to result in at least a week off work almost tripled the risk of suicide among women, and increased the risk by 50 percent among men.”

Multiethnic business workers comp psychological people

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The diverse panel ─ made up of a researcher, labor leader, clinician, and employer ─ includes BU Prof. Boden; President Steven Tolman of the Massachusetts AFL-CIO; Dr. Kenneth Larsen of the New England Baptist Hospital; and Mary Christiansen of Southern California Edison.

The following are among the questions the panel will address:

  • What is the relationship between occupational injuries and mental health?
  • What treatment options are available to address mental health issues arising from occupational injuries?
  • What can labor and employers do to promote mental health and, specifically, to assist workers injured on the job?

The WCRI conference is a leading workers’ compensation forum. The two-day program highlights the Institute’s latest research findings while drawing upon the diverse perspectives of highly respected workers’ compensation experts and policymakers from across the country. Conference participants will leave with new insights, valuable networking contacts, and a better understanding of key issues in today’s competitive environment.

 

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Filed Under: WCRI Annual Conference Tagged With: clinician, policymakers, psychological components, unmentionables

Workers Comp Content – Avoiding the Recycle Button

February 20, 2020 By JL Risk Management Consultants

Workers Comp Content – Are We Just Recycling The Same Subjects?

Creating new and interesting Workers Comp content becomes more of a challenge with every article.   Google dislikes repetitive content.   I think it has a point.  No one wants to read the same thing over and over again. 

pic workers comp content recycling bins

Wikimedia Public Use License – EpSos de Flickr

Take the coronavirus, for instance, one news story was slightly altered and repeated again and again at almost all news outlets.   An article from 2018 shows my concern for the same-old-same-old recycled crises in Workers Comp content.    

For instance, the opioid crises occurred in the  1980s and again in the 1990s.  Workers Comp gave it due attention in 2009 and forward.  

The Workers Comp Medicare Set-Asides were the big news for quite some time.  That subject faded away.  Do not worry.  The WCMSAs will be the buzzword again soon.  Trust me. 

Fresh Workers Comp Content Frustrating At Times

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I, as have other Workers Comp blog authors, sit for many hours racking my brain to provide good content that is not a rehash of older articles that I have written in the last 10 years.  

Writing on conferences seemed to create a large amount of fresh Workers Comp content.  Then, the conferences became repetitive, so my resulting articles followed suit and also became repetitive. 

I do not write every article to satisfy Google’s SEO rules.  Most of them are written to follow those guidelines.  Many search terms where I have broken every rule ranked higher than when I stayed in the boundaries of proper SEO.    The J&L Cutcompcosts.com website does not sell any materials online.  I am told that I need to convert to https for reader privacy and safety.   What info would a user put on this website as no information is required? 

One of the more irritating rules suggests that the longer the article, the better the article will rank.  If you notice now on a Google search, you end up with massive articles that contain the answer to your one quick question – but you have to scroll through countless paragraphs to find your answer.  

California AB 5 Example

California Assembly Bill 5 ( AB 5) seemed to cover new ground in Workers’ Comp content. (Not so.)   The battle between Federal and State taxing agencies and employers that use independent contractors has been waged since the 1940s. 

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Workers Comp carriers and employers debating on who is a covered contractor and who is not has been in existence as long as Workers’ Comp carriers have been in existence.

California AB 5 looked to be a new idea on how to handle independent contractors.  Then again, that new CA law still remains in flux and will not be settled for a few years, if ever. 

Top Ten Recycled Terms Over The Last 30 Years 

You can fill in this list below as it applies to your situation.   These 10 comes from my experience and background. 

  1. Employee or Employer Fraud
  2. Opiates 
  3. Major court decisions
  4. Independent Contractors 
  5. Soft Market vs. Hard Market 
  6. Carriers and PEO’s closing shop
  7. Analytics becoming the main statistical drivers – still waiting on this one 
  8. Non-opioid treatment regimens 
  9. Classification Code changes – happens every year 
  10. New forms of Workers Comp insurance that turn out to be the old forms – just repackaged 

The list could easily reach 100 if one takes enough time to think through the recycled Workers’ Comp content.  

 

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Filed Under: Wokrers Comp Changes Tagged With: CA law, flux, Opiates, SEO, slightly altered, WCMSA

IRS Subcontractor Employee Determination Covers Three Main Points

February 18, 2020 By JL Risk Management Consultants

IRS Subcontractor Employee Determination Starts With Three Common Law Decisions 

The IRS Subcontractor Employee determination pages were updated recently.  As promised, I wanted to provide any updates.   The updates on these webpages were more structural than substantive.   

Please remember the common law rules constitute a starting point on determining whether a worker is a subcontractor or employee,  Each state law contains many rules on how on the employment relationship. 

effective irs subcontractor employee chart tax rates

Wikimedia License – Gues2625

The three main common law areas in determining employment status are:

From The IRS Subcontractor Employee Determination Rules 

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

  1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
  2. 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.)
  3. 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 an 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 that 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.

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The IRS breaks down each of the three determinants into its own webpage.  

Behavioral Control 

Business people at the office place

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Behavioral control refers to facts that show whether there is a right to direct or control how the worker does the work. A worker is an employee when the business has the right to direct and control the worker. The business does not have to actually direct or control the way the work is done – as long as the employer has the right to direct and control the work.

The behavioral control factors fall into the categories of:

  • Type of instructions given
  • Degree of instruction
  • Evaluation systems
  • Training

Types of Instructions Given

An employee is generally subject to the business’s instructions about when, where, and how to work. All of the following are examples of types of instructions about how to do work.

  • When and where to do the work.
  • What tools or equipment to use.
  • What workers to hire or to assist with the work.
  • Where to purchase supplies and services.
  • What work must be performed by a specified individual.
  • What order or sequence to follow when performing the work.

Degree of Instruction

The Man doing instruction Employee at the front

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Degree of Instruction means that the more detailed the instructions, the more control the business exercises over the worker. More detailed instructions indicate that the worker is an employee.  Less detailed instructions reflects less control, indicating that the worker is more likely an independent contractor.

Note: The amount of instruction needed varies among different jobs. Even if no instructions are given, sufficient behavioral control may exist if the employer has the right to control how the work results are achieved. A business may lack the knowledge to instruct some highly specialized professionals; in other cases, the task may require little or no instruction. The key consideration is whether the business has retained the right to control the details of a worker’s performance or instead has given up that right.

Evaluation System

A man teach IRS Subcontractor Employee on the computer

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If an evaluation system measures the details of how the work is performed, then these factors would point to an employee.

If the evaluation system measures just the end result, then this can point to either an independent contractor or an employee.

Training

If the business provides the worker with training on how to do the job, this indicates that the business wants the job done in a particular way.  This is strong evidence that the worker is an employee. Periodic or on-going training about procedures and methods is even stronger evidence of an employer-employee relationship. However, independent contractors ordinarily use their own methods.

 

Financial control

Financial control refers to facts that show whether or not the business has the right to control the economic aspects of the worker’s job.

The financial control factors fall into the categories of:

  • Significant investment
  • Unreimbursed expenses
  • Opportunity for profit or loss
  • Services available to the market
  • Method of payment

Significant investment

An independent contractor often has a significant investment in the equipment he or she uses in working for someone else.  However, in many occupations, such as construction, workers spend thousands of dollars on the tools and equipment they use and are still considered to be employees. There are no precise dollar limits that must be met in order to have a significant investment.  Furthermore, a significant investment is not necessary for independent contractor status as some types of work simply do not require large expenditures.

Unreimbursed expenses

Man explaining to IRS Subcontractor Employee on computer

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Independent contractors are more likely to have unreimbursed expenses than are employees. Fixed ongoing costs that are incurred regardless of whether work is currently being performed are especially important. However, employees may also incur unreimbursed expenses in connection with the services that they perform for their business.

Opportunity for profit or loss

The opportunity to make a profit or loss is another important factor.  If a worker has a significant investment in the tools and equipment used and if the worker has unreimbursed expenses, the worker has a greater opportunity to lose money (i.e., their expenses will exceed their income from the work).  Having the possibility of incurring a loss indicates that the worker is an independent contractor.

Services available to the market

An independent contractor is generally free to seek out business opportunities. Independent contractors often advertise, maintain a visible business location, and are available to work in the relevant market.

Method of payment

Hands presenting IRS Subcontractor Employee money concept

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An employee is generally guaranteed a regular wage amount for an hourly, weekly, or other period of time. This usually indicates that a worker is an employee, even when the wage or salary is supplemented by a commission. An independent contractor is usually paid by a flat fee for the job. However, it is common in some professions, such as law, to pay independent contractors hourly.

Type of relationship refers to facts that show how the worker and business perceive their relationship to each other.

 

Type of Relationship  Between the Two Parties – IRS Subcontractor Employee Determination

The factors, for the type of relationship between two parties, generally fall into the categories of:

  • Written contracts
  • Employee benefits
  • Permanency of the relationship
  • Services provided as key activity of the business

Written Contracts

Although a contract may state that the worker is an employee or an independent contractor, this is not sufficient to determine the worker’s status.  The IRS is not required to follow a contract stating that the worker is an independent contractor, responsible for paying his or her own self employment tax.  How the parties work together determines whether the worker is an employee or an independent contractor.

Employee Benefits

Hand with IRS Subcontractor Employee business finance

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Employee benefits include things like insurance, pension plans, paid vacation, sick days, and disability insurance.  Businesses generally do not grant these benefits to independent contractors.  However, the lack of these types of benefits does not necessarily mean the worker is an independent contractor.

Permanency of the Relationship

If you hire a worker with the expectation that the relationship will continue indefinitely, rather than for a specific project or period, this is generally considered evidence that the intent was to create an employer-employee relationship.

Services Provided as Key Activity of the Business

If a worker provides services that are a key aspect of the business, it is more likely that the business will have the right to direct and control his or her activities.  For example, if a law firm hires an attorney, it is likely that it will present the attorney’s work as its own and would have the right to control or direct that work.  This would indicate an employer-employee relationship.

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Please remember this IRS subcontractor employee determination mini-guide is a rule of thumb only. 

 

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Filed Under: Independent Contractor Analysis Tagged With: Behavioral, dollar limits, Evaluation systems, method, mini-guide, Periodic, substantive

WCRI 2020 Annual Conference Next Month – Show Me The Data + Secret

February 7, 2020 By JL Risk Management Consultants

The WCRI 2020 Annual Conference – Data and Study Paradise  –  Thursday March 5th – 6th   

The WCRI  2020 Annual Conference (Workers Comp Research Institute) heads back to Boston this year.  Last year, the Conference was held in  Phoenix.  

I will be there on the front row doing my Workers’ Comp Press duties.  The Conference will not be blogged live this year as in the past.  I will write articles from the day’s sessions.   

Worth wcri 2020 annual conference medal