For Business Owners. Workers Compensation Cost Containment Guide

Transcription

1 Harleysville Insurance, headquartered in Harleysville, Pennsylvania, provides a wide array of insurance-related products and services for individuals and businesses through a network of regional insurers and independent insurance agencies. Workers Compensation Cost Containment Guide One of the nation s leading insurance organizations, Harleysville has a long-standing reputation for excellent customer service, and the financial strength to meet its obligations to policyholders now and into the future. Ask your independent insurance agent for more information about our full line of insurance coverages, including: Custom business owners programs Commercial auto Employment practices liability General liability Business continuation plans Personal auto and homeowners For Business Owners Z-616 1/09

2 Workers compensation cost containment: a team effort. We ve prepared this cost-containment guide to help you join forces with millions of other Americans employers and employees alike in controlling the costs of workers compensation insurance. The suggestions in these pages can help you evaluate your current practices and develop a program with an eye toward cost control and improved service to your employees. With a well-managed program, you can: Reduce injuries on the job. Rehabilitate your injured employees. Promote return to work as soon as medically possible. Reduce litigation and associated costs. Identify and discourage fraud. Control medical and indemnity costs. Hold the line on your own insurance premiums. Cost containment is a team effort, so please take advantage of our assistance. Harleysville can, at no charge, help you: Inspect your premises. Improve your workplace safety. Assist you in prompt reporting of all work-related injuries. We re dedicated to helping you manage your workers compensation costs. Together with the cooperation of medical professionals, industry leaders, employees and legislators we can restore and strengthen a system that has worked hard and well for many years. Table of contents Before an injury occurs Page 2 Adopt a safety attitude Identify safety hazards Establish and enforce safety standards Set up a health and safety committee Establish a record keeping system for all work-related injuries and illnesses Form first aid and emergency response teams Educate employees about safety Provide informational literature Educate employees about their workers compensation benefits and the importance of reporting fraud When an injury occurs Page 8 Follow proper injury reporting procedures Thoroughly investigate every incident Be alert for fraud indicators Make prompt and regular contact with injured employees Offer alternative duties to recovering employees How Harleysville can help Page 14 Medical disability specialists Claims specialists Loss control representatives Special investigators Attorneys Preferred provider organizations Telephonic case management 1

3 Before an injury occurs It s far less painful to prevent injuries than to treat them. Although many factors contribute to rising workers compensation costs, the best solutions are in the workplace. By setting up and following an effective loss control program, your company will benefit directly in many ways: Loss prevention is the most direct way you can control your insurance premium. Fewer accidents and injuries mean less disruption to your business. Lower insurance premiums contribute to profit margins and enable you to be more competitive, especially when submitting bids. A safety and loss prevention program shows your employees you re concerned about their welfare. Please take some time to read the following tips on developing an effective loss control program. Adopt a safety attitude. Think safety to work safely sounds trite, but it s true. The safety mindset should start at the top; senior management must actively demonstrate its commitment to safety in each and every company activity. Supervisors are the key to ensuring that employees do their jobs safely. Equipment and machinery may pose dangers even to veteran employees. Scrutinize work procedures and work habits. Harleysville s loss control representatives can help you identify potentially dangerous situations. They ve surveyed thousands of small and mid-sized businesses; they can often spot accidents waiting to happen that you may not see. When identifying your hazards, you should look for areas that might contribute to these leading causes of workers compensation losses: Repetitive motion injuries Exertion-related sprains and strains Slips, trips and falls Work-related stress After you ve identified your exposures, take steps to reduce or eliminate as many as you can. Inspect your premises weekly or monthly to spot additional problems that may develop. Report deficiencies in writing to the at-fault departments, using a form that allows you to quickly note hazards with a simple check mark. Then, look ahead by setting up safety standards that cover all aspects of your operations. Identify safety hazards. Before you can set safety standards for your company, you need to know what your hazards are. Start your loss control efforts by reviewing your past losses to identify any trends, then survey your premises for conditions that might cause injury or illness. During your inspection, remember to identify hazards that may exist in work area design and layout. 2 3

4 Establish and enforce safety standards. Based on the nature and size of your business, you should: Establish clear-cut standards for footwear, eyewear and equipment usage. Comply with all federal, state and local safety codes and regulations that apply to your business. If your employees travel on business, make it a company policy that drivers wear safety belts at all times. Provide defensive driver training to all operators of company vehicles. Consider implementing an effective drug-free workplace program. Have written safety procedures for each job activity on file. Review your safety procedures regularly and keep them up-to-date. In addition, we recommend preparing a safety manual spelling out the managers and employees safety responsibilities; we ll be happy to help you. Develop a written company policy that requires your employees to report any work-related injury or illness to their supervisor as soon as is practical, but no later than within 24 hours. (Since the Workers Compensation Act does not provide you with any controls in this area, you should consider a policy that provides for disciplinary action when a violation occurs.) Set up a health and safety committee. Start by appointing a chairperson with the rank and authority to see that safety policies are carried out. Be sure to include managerial and non-managerial employees. Depending on your business, your committee may have one or more of these responsibilities: Approving safety procedures and policies. Investigating work-related injuries or illnesses. Charting the injury trends and taking steps to prevent recurrences. You may want to chart injuries by department, location, shift, age, unsafe acts or conditions and nature of injuries. Setting and publicizing safety standards. Determining safety requirements covering company purchases and subcontracts. Safety committees assist supervisors in the investigation and review of accidents and often help develop control options to correct hazardous conditions. Establish a record keeping system for all workrelated injuries and illnesses. Record keeping is the number one OSHA violation in terms of the number of citations issued. Safety records provide: Documentation of a company s safety efforts. Evidence of management s commitment to safety, quality, and the well-being of its employees. The basis of a claims defense against legal liability and negligence no records = no defense = guilt and responsibility. OSHA has record keeping standards that apply to most employers in this country. Harleysville s loss control representatives can assist with training and support in the development of an effective record keeping program. 4 5

5 Form first aid and emergency response teams. Emergency planning is key to determining potential catastrophes. Designate certain individuals to identify disasters and the appropriate emergency response. Duties should include: Contacting the fire department/rescue squad. Shutting down vital equipment. Taking steps to prevent further injury and/or property damage. At a minimum, an on-site employee should be certified in administering first aid and cardio-pulmonary resuscitation (CPR). Post emergency phone numbers. Provide fire extinguishers and train employees to use them properly. Educate employees about safety. Let new employees know you re serious about their safety from day one. General safety training should be scheduled automatically for all new employees. New employees should also receive detailed job-safety training in their department. Have new employees sign a statement that they have received safety training and understand their roles. Employees preparing for supervisory positions should receive additional training on equipment that will become a part of their responsibilities, as well as on first aid, firefighting, record keeping and any other job safety issues. Remind all employees how important it is to report all injuries immediately. Provide informational literature. Distribute booklets, newsletters, posters and signs reminding employees to take safety seriously. We will be glad to help you prepare and present safety information to your employees. Educate employees about their workers compensation benefits and the importance of reporting fraud. Most employees have very little knowledge about their workers compensation benefits. The best time to educate them is before an injury occurs. Reassure your workers at new-employee orientations and other employee forums that the appropriate benefits will be available, if needed. Some workers compensation cases go to court only because the injured employee is unaware of his or her benefits or is understandably confused by the system. If you inform your employees up front about their legal rights, they may be more willing to try to work within the system. Let employees know they have the right to hire an attorney at any time during their settlement process if they feel it s necessary. At the same time, point out that involving an attorney may reduce the money they collect, since legal costs are often based upon a contingency fee (of up to 20 percent) that comes out of the employee s settlement. Remind your employees that payments for pain and suffering are never made under workers compensation law. Discuss the importance of seeking medical treatment from a designated panel physician. Let employees know that people who engage in fraud drive up your company s insurance costs, cut into your profits, and hurt all employees. What s more, workers compensation fraud is a crime. Give employees the telephone number for Harleysville s toll-free fraud hotline ( ) and encourage them to anonymously report any suspected fraud or abuse of benefits. 6 7

6 When an injury occurs We want to help you care for your injured employees as well as pay claims as promptly as possible. You and your employees can speed the process and keep your costs as low as possible by taking a number of steps when an injury occurs. Follow proper injury reporting procedures. Once you or the injured worker s supervisor has been notified of an injury or illness, obtain detailed information about the accident and the injury, and call our central claims unit (CCU) at You also have the ability to file a workers compensation claim online. To do so, visit click on the File a claim icon, and go to Click here to submit your claim online. In most states, Harleysville must decide whether to pay or challenge a claim within two to three weeks from the time an injury or illness has occurred. Reporting workrelated injuries and illnesses immediately to our CCU is the most important thing you can do to control costs and improve our service to your injured employees. By notifying us immediately of an injury or illness, you: Allow time for us (and your safety committee) to conduct a thorough investigation. Deter litigation. Avoid penalties in the form of additional surcharge payments sometimes awarded to an employee whose benefits are not paid in a timely manner. Ensure prompt attention to the injured worker s medical care from the start, to ensure the fullest use of our cost-saving measures. In turn, we are committed to communicating with you about the payment of expenses and wages and your employee s medical progress. Thoroughly investigate every incident. Of course, the vast majority of claims do not involve fraud or a safety problem. Nevertheless, you should investigate every incident thoroughly. Conduct your investigation as soon as possible after the incident while facts are fresh in the minds of the injured employee and any witnesses. The more thorough your accident investigation, the greater your chances of preventing a similar recurrence. Focus your investigation on what caused the injury, rather than on who s to blame. If the employee was working with a piece of equipment or machinery when he or she was injured, obtain answers to the following questions: Did the equipment malfunction? Were all the safety guards on the machine? Was the equipment inspected regularly? If the employee fell from scaffolding, was the platform sturdy and in good repair? Were proper guardrails provided? Was the employee simply distracted? If so, why? Was there adequate ventilation to prevent drowsiness? Was the accident due to temporary conditions that will change? Were proper tools and equipment being used? Was proper training provided? Was proper supervision provided? 8 9

7 If you discover that an unsafe condition did exist, eliminate the hazard. If a safety problem didn t appear to have caused the injury, ask yourself: Was the employee frequently absent? Was the employee unhappy with his or her job? Did the employee expect to be laid off? After you have conducted an in-depth investigation, report the names of witnesses and anything questionable to Harleysville. If possible, send information supporting your findings with the injury report. Be alert for fraud indicators. While most employees are honest, insurance fraud has become big business for not-so-honest individuals. While holding on to your faith in people, keep your eyes open for anything questionable. Remember, the presence of one or more fraud indicators doesn t mean fraud has been committed. Conversely, the absence of indicators doesn t automatically validate an employee s claim. Immediately report any fraud indicators (see next page) to our claims specialist. Signs of possible fraud: You receive a tip-off from an employee or accident witness. (Encourage employees to report anything suspicious and assure them their reports will be kept anonymous.) The accident occurs first thing on a Monday morning, or on the employee s first or second day on the job. You receive inquiries from one or more companies carrying disability policies. (The employee may make more on disability than while working.) An individual who: has had repeated injuries. always suffers from the same type of accident. takes an unusually long period of time to recover. is never home when called. has rough or dirty hands (indicating other activities during recovery). receives benefit checks close to normal wages. has checks mailed to a post office box. fails to keep scheduled doctor appointments, follow recommended treatment and/or sign certain documents. is quick to obtain counsel. always uses the same attorney or doctors, or uses an attorney who has represented other injured employees from your company. has family members with pending or prior claims, or collects benefits from one source while building a claim against a third party. frequently changes physicians ( shops for doctors). is in a poor financial position. has a poor work record or seems bored with his or her job. has small children at home (a possible reason to delay returning to work)

8 Make prompt and regular contact with injured employees. For some, absence makes the heart grow fonder...of more time off. When you consider that it takes only a week of vacation to make most of us forget about work, imagine what happens when an employee is at home for months. Be sure to: Make contact with your injured employees quickly, and follow up regularly. Ask them how they re feeling, and remind them that you need them back. Review their workers compensation benefits with them to eliminate any anxieties they may have about their medical bills and wages. Send them copies of company communications and publications. Your personal attention will encourage injured employees to get back to work, ultimately reduce medical costs and improve employee productivity (by relieving other employees who have had to fill in for an absent worker). And happier employees are less likely to seek expensive, time-consuming settlements. Offer alternative duties to recovering employees. Many employers are unaware of their right to offer rehabilitating employees modified or alternative work duties in exchange for their early return to work. Our medical disability specialists not only work toward assuring proper care for your injured employees, but also toward returning them to work as soon as medically possible. Once an employee shows appropriate signs of recovery, our medical disability and loss control specialists will work with you and the medical provider to determine if the individual can work part-time or perform less strenuous tasks before resuming former duties. If the employee is able, we can help you select alternative tasks that make the best use of his or her individual skills. By offering return-to-work programs: You can increase your chances of retaining a good employee. You can provide the injured employee a greater net take-home pay opportunity. You can reduce the wages you pay out to reflect the modified duty. You can reduce indemnity costs, which helps to contain your insurance costs. In many states, employers can reduce indemnity costs by offering modified jobs, alternative duty, or shorter hours. Suppose you employ a $20-per-hour employee who has a broken arm and injured hand. While he or she may not be able to fully use both hands, perhaps the employee could with the doctor s permission perform a modified job requiring use of only one hand, for perhaps $5 per hour. As the employer, you may be required to pay only the $5 per hour wages for the temporary duties, while we (under workers compensation) would pay approximately two-thirds of the difference between his or her present earnings and pre-injury wages. So, you would be getting the full amount of work you are paying for, plus assuring a better loss experience (your workers compensation claim would reflect 66 2/3 percent of $15 per hour in paid wages versus 66 2/3 percent of $20 per hour).* According to workers compensation laws in most states, wage benefits continue until your employee returns to full-time work. *The partial disability wage benefits illustrated in this example are not applicable in New Jersey, and vary by jurisdiction

9 How Harleysville can help Harleysville employs a network of professionals who dedicate their time exclusively to containing workers compensation costs through medical disability services. These medical professionals: Help minimize workplace injuries. Help assure quality care for injured employees. Speed injured employees recoveries. Facilitate return to work as soon as medically possible. Provide prompt and fair settlements. Medical disability specialists Our medical disability specialists play a major role in our workers compensation operations through their work with policyholders and injured employees, as well as within our own organization. With extensive medical and vocational expertise as well as a significant database at their disposal these specialists: Identify major trends affecting the degree of treatment and recovery time required for more serious disabilities. Develop protocols from their studies for our claims specialists to use to project realistic treatment programs and recovery time frames. Aggressively follow up with physicians to ensure appropriate treatment plans and facilitate return to work as soon as medically possible. Closely review all bills to ensure that every item charged to your employee s workers compensation case is directly related to the work injury and is appropriate. Claims specialists Harleysville employs claims specialists who dedicate their efforts exclusively to workers compensation. In addition to their ongoing educational objectives, they must follow guidelines for making prompt contact with the policyholder, the injured employee and medical providers. They re also required to communicate regularly with all concerned parties about the employee s medical progress. And, finally, they must assure compliance with the varying time-reporting requirements and procedures in the many states in which we operate. Loss control representatives One of the many ways Harleysville s loss control representatives help our policyholders contain workers compensation costs is by working with our rehabilitation specialists to stay abreast of new trends that are extending the definition of occupational injury and disease. Special investigators When you or we suspect fraud or abuse of benefits, our Special Investigation Unit (SIU) will conduct thorough investigations to prevent the payment of fraudulent claims. Attorneys To ensure that your litigation is handled promptly and professionally, we use the services of attorneys who deal exclusively in workers compensation litigation. When claims involve third-party action, we also use counsel who specialize in workers compensation to assist us in the subrogation or recovery process

10 Preferred provider organizations As a further cost-containment measure, Harleysville uses preferred provider organizations (PPOs) and works with employers to establish physicians panels whenever possible. These special organizations and physicians offer: Savings. Harleysville works with hospitals, doctors, pharmacists and equipment providers who, in exchange for volume business, discount their services without sacrificing quality. Expertise. By working closely with a special network of physicians, we ensure that injured employees are treated by providers who are experienced in handling occupational injuries and illnesses. Further, based on our experience we can recommend specialists who understand the disability rating system. Medical documentation. PPO participants are obligated to supply comprehensive medical information. This thorough medical history helps assure that the employee gets quality care that is directly related to the work injury. The data also is useful in situations where an injury is claimed to be more serious than medical records indicate. More information is available. Harleysville has a long history of helping employers control their workers compensation costs, and has taken an active role in efforts to improve the workers compensation system in states where the company does business. Harleysville also participates in safety research through trade and professional organizations. Staying abreast of trends in accident prevention, medical treatment and a variety of related areas helps us assist our policyholders with new technologies and procedures as soon as they become available. Further, Harleysville offers numerous brochures on our specific cost-containment programs through the independent insurance agencies that represent us, as well as a wide array of general safety materials including workplace safety videos available through our loss control department at , Ext Telephonic case management We use telephonic case management (TCM) nurses to introduce medical expertise early on in the disability management process. Through early intervention, the TCM nurse identifies: the diagnosis injury severity injury mechanism prescribed treatment plan and its appropriateness return-to-work potential estimated length of disability medical cost projections The TCM nurse and claims specialist work together to develop a joint action plan to return the injured employee to work as soon as medically possible. 16