Workers Comp Claims Explosion If Economy Rebounds Quickly

October 16, 2012 By JL Risk Management Consultants

The Workers Comp Claims Explosion Due To Learning Curve

Will a workers comp claims explosion occur in the next few years? The economy is going to eventually recover from its recent lows. If there is a very quick rebound, insurance carriers, TPA’s, employers, and any type of insurance personnel must be prepared for an explosive increase in the number of claims.I often do phone consulting for investment groups examining Workers Comp vendors from TPA’s to translation services. One of the questions I am often asked is there anything out there that would turn the claims industry upside down.

Picture of Worker Man Sitting on Big Bomb Workers Comp Claims Explosion Concept

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The Learning Curve will be the bane of many Workers Comp insurance personnel and any employer that is large enough to have an Experience Rating (E-Mod or X-Mod). We have all heard of the studies that almost 90% of accidents occur the first time a person is using a new tool or machine. This number can be proven very easily using the learning curve.

I coined a term a number of years ago when I was working a claims desk. The number of accidents right after a hurricane spiked heavily in the construction industries. The investigation of almost all the claims showed a discernible trend. Due to such a heavy increase in demand for construction workers, there were many new unskilled workers on the job. I saw many power tool incidents. I called it the “Hurricane Syndrome.”The true formula for the learning curve is here. If you look at the graph on the page, you can see that it takes someone much longer to do a task than when the workers gains experience. OSHA does a great job of forecasting injury rates over 200,000 work hours. However, I do not see a study from OSHA on time the worker spent on the job before the accident.

Picture of Hand Doing Puzzle Workers Comp Claims Explosion Learning Curve

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The learning curve does not always apply to workers trying out a tool or machine for the first time. Workers that experience long standing layoffs will be much more likely to have accidents as they may not have used certain machines or tools for months or possibly years.

My advice for insurers/TPA’s is to heavily staff their claim departments when signs of the recovery become obvious. The learning curve has been tested since the 1800’s and was studied heavily by NASA starting in the 1930’s. The spike in injuries is not a theory. It is a proven fact.

Employers will need to be ever vigilant in reporting their claims and following up with their WC adjusting staff. Providing your insurance carrier of TPA with the First Reports of Injury in a timely manner will be very critical.

If anyone can locate the study on the exact % of injuries when someone uses a machine or tool for the first time, please email me the link and I will insert in this post. Thanks.

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Workers Comp Medical Only Claims – Your Money Down Toilet

April 27, 2011 By JL Risk Management Consultants

Workers Comp Medical Only Claims And Claims Festering(c)

Certain Workers Comp Medical Only Claims snowball into uncontrolled Lost Time Claims for employers and carriers. My last post on Medical Only claims pointed out the pitfalls and concerns of medical only claims. I promised that I would get back to how employers should monitor medical only claims.

Picture Of Doctor And Patient Workers Comp Medical Only Claims Shaking Hands

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One of the huge mistakes by employers and carriers is the medical only claims are allowed to fester for many weeks and months and not receive the proper attention. I have seen many medical only claims turn out to be an employer’s worst nightmare.

A medical only claim has really had no investigation performed and is usually more of a medical only claim processor’s job. A lost time adjuster may never see a medical only claim until it turns serious, such as a physician’s office calling for authorization for a major back surgery. By that time, it is almost too late to do anything that would resemble a good investigation of the claim.

Medical only claims are not that hard to monitor. Avoiding a delayed investigation by the Workers Comp adjuster is the goal.

Excel Spreadsheet Workers Comp Medical Only Claims Screenshot

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An Excel spreadsheet can be used as a diary system. An Outlook or some type of calendar program will work even better. After filing the First Report of Injury for a medical only claim, calendar a follow up with the employee at 30 days, 90 days, 6 months, and one year. If they have an email address, that is the easiest method to contact them.

The others side of the coin, so to speak, is what info is flowing to your insurance carrier or TPA without your knowledge. Medical providers often send the bills and reports directly to the claims office. You should ask that a copy of the medical bills and reports are also sent to your office. If the report points out the employee’s condition is worsening or surgery is anticipated, you will be able to point this out to your Workers Comp claims department.

One of the most heavily posted recommendations by me is having online access to your claims. You can easily see what is occurring in the claim and to see how the carrier is handling the medical only claims. You may also be able to see scans of the medical reports or medical charges paid.

Using these two simple techniques will avoid you surprising your claims adjuster. Do not rely solely on your Workers Comp claims department to catch everything on medical only claims. A surprised claims adjuster may set your Workers Comp reserves very high, which means your E-Mod will be higher, which is money down the toilet.

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Monopolistic Workers Comp States Examined Further

March 7, 2008 By JL Risk Management Consultants

Monopolistic Workers Comp State Funds – Six Remaining

Does the monopolistic Workers Comp state funds show any problems? As of today, there still six states that have monopolistic state funds – They are North Dakota, Ohio, Washington, West Virginia, and Wyoming.

Hands Presenting Banking Funds Monopolistic Workers Comp Concept

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West Virginia is still in a monopolistic condition as only one carrier, Brickstreet(c) can write Workers Comp business there. That will change on 07/01/08. Please see one of my prior posts on the investigations into the state funds going on in ND and OH.

In these six states, the state governments mandate that employers purchase workers compensation insurance from the state fund. These states don’t even allow insurance companies to sell workers’ compensation to employers headquartered within their borders.

Vector Graphic of Green Dollar Signs Monopolistic Workers Comp State Funds

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There is a caveat to state funds that most employers do not realize until they receive a surprising claim. Even if your business isn’t domiciled in one of these states, you could still be affected by their laws. If one of your employees is injured in any of these states and decides to file a workers compensation claim, that state’s laws would apply. That is why “employer’s liability” coverage is very important. If you have an employee that is injured in WA and you do not have coverage there or employer’s liability, you will pay for the expenses directly out-of-pocket and may face steep fines from the Insurance Commissioner of that state.

This coverage would pay for related expenses and damages in case you are ever sued for the employment-related injury or illness. Most insurers may offer this extended coverage in these states, but only if you specifically request that they add it to your policy. There are a few Workers Compensation carriers such as The Hartford (c) that add it to all Work Comp policies.

I always recommend in all my presentations that employers make sure they have an “all-states” endorsement to their policies. It does not cost that much and can save an employer’s Workers Comp program from taking a big hit.

Next Up – The Most Expensive Component of all Workers Comp claims, and it is not the medical component. In fact, it never shows up in a file in any place. No really, check it out.