Six ways to control the transportation-related Workers’ Comp costs

While the average vehicle crash cost to an employer, according to the National Institute of Occupational Safety and Health (NIOSH) is $16,500, it rises to $74,000 when a worker is injured in the crash. Whether you manage a full fleet or a few vehicles, this is a high-risk exposure that warrants attention. Here are six ways to help controll costs:

Strengthen hiring practices
Employers have a duty to ensure that their drivers are qualified and safe. Hiring practices should include screening all potential drivers using Motor Vehicle Department records and police checks in any and all states where the prospective employee has lived or worked, road testing in the actual vehicle and drug and alcohol testing. Be alert to personality traits, also. A study by the Federal Motor Carrier Safety Administration (FMCSA) rated personality traits such as aggressiveness, impulsivity, and inattentiveness as having the highest associations with risk.

Implement pre-employment testing
According to the latest regulations from the Federal Motor Carrier Safety Administration, a driver must not operate a commercial motor vehicle unless he or she is medically certified as physically qualified to do so. So how do you know if they are fit, or aren’t coming on board with a pre-determined condition or injury?

Each state addresses the aggravation or exacerbation of a pre-existing condition differently. In most states, if the on-the-job injury (a driver injures his back climbing into a cab) aggravates a pre-existing condition, it is considered to be a part of the payable injury, based on a physician stating it’s within a “reasonable medical probability” that the driver getting into the truck aggravated the pre-existing condition. 

But some states have adopted a different way of determining on-the-job injuries from pre-existing conditions by incorporating a provision called major contributing factor. This means that for an accident or aggravation of a pre-existing condition to be payable, the condition being treated by a doctor has to be at least 51% related to the on-the-job injury.  

Another tricky area of pre-employment screening is determining if the job applicant has a history of filing Workers’ Compensation claims. Under the Federal Americans with Disabilities Acts (ADA), employers cannot inquire about past Workers’ Compensation claims, nor can they refuse to employ someone who has filed past claims or whose disability or impairment has no bearing on whether or not they can perform the essential tasks of the job. This means that someone can’t be denied a job to drive a truck just because his or her left leg is two inches shorter than the right. The job interview can only determine if the person can perform essential job functions, with or without reasonable accommodation.

In the end, it’s important for the employer to take all steps necessary to make sure they hire the right person for the job. Once companies understand that they, and not the insurance companies, are paying the freight on employee injuries, then driving down injury-related costs will take on increased importance.

Monitor your drivers’ health
According to the 2006 Large Truck Crash Causation Study, 88% of the critical reasons for accidents are attributed to drivers as opposed to vehicle failure, weather, and other conditions. And of that number, 15% fell into the category of “non-performance” issues, which are drivers falling asleep, having a heart attack, or being disabled by some other physical impairment. According to an Associated Press story by Emily Fredrix, the answer is quite simple: “Many truckers are obese, and only about one in 10 gets regular aerobic exercise. Sleep apnea, which is linked to obesity, is rampant, too.”

Ultimately, the burden falls on the employer to be more pro-active in addressing the wellness of their drivers, to make sure they get proper medical treatment and to help keep their drivers in shape. If employers implement work-based wellness programs that address such issues as sleep apnea, high-cholesterol, high-blood pressure, and weight-loss programs, as well as encourage regular exercise and stretching, the result will be a drop in Workers’ Compensation claims.

Implement rigorous standards to prevent accidents, falls, slips and trips
Falls are the second highest cause of injury in the trucking industry and trucking companies know that preventing accidents and falls require strict company policies and a rigorous training effort. They develop written policies and procedures that address issues such as mandatory seat belt use, banning cell phones and texting while driving, adherence to speed limits, conducting work/paperwork while driving, non-skid footwear, housekeeping, vehicle maintenance and inspection, vehicle ingress/egress, proper lifting procedures, securing materials for transport, accident reporting and investigation and so on.

Sometimes employers with a few drivers operate under the misconception that common sense will govern and lead to safe work practices. It simply is not true.

Identify subrogation opportunities
Subrogation is one of the least understood aspects of Workers’ Compensation and there are few areas in which the laws of each individual state vary more and are applied as differently, than in the area of Workers’ Compensation subrogation. “Subrogation” is a legal concept under common law where one party transfers their rights of recovery to another party granting them the right to recover damages from a different third party. For example, if the driver is in an accident and the insurance company pays the Workers’ compensation benefits, there is the right to pursue repayment from the party that caused the accident. In some states, an employer’s subrogation rights derive exclusively from those of the injured employee, while in others employers can file. Pursuing subrogation opportunities is important because of the effect the claim has on the Experience Modification Factor.

Understand how the Experience Modification Factor (Mod) works
The Experience Modification Factor is an adjustment that’s made to the Workers’ Compensation premiums based on the company’s prior three years payroll and incurred losses. In effect, it compares a company’s losses with other companies of a similar size in the same industry. For instance, if the Mod is over 1, the company’s losses are more than expected and they will pay more; if it is under 1; they have fewer losses and will pay less.

It is crucial that management and supervisors understand that insurance companies don’t pay for workplace injuries, their company does, and the Mod influences what their company pays. In the subrogation example above, the outstanding claim is assessed under the experience-rating plan. If a successful recovery is made through the suit against the third party, the experience ratings rule allows for revisions in the modifier.

It should be every employer’s goal to strive for the lowest possible Experience Modification Factor. Understanding what transportation-related injuries have occurred, the number of modification points attributed to each injury, the annual increase in premiums due to specific injuries, and what the cumulative increased premium cost is over a three-year period is key.

In high-risk areas, an attitude that “accidents happen-- that’s why we have insurance” can permeate an organization. From the supervisors on down to the employees, it’s critical that everyone in the organization be aware that it’s the employer’s money being spent, not the insurance company’s.