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Handling workers' comp claims is a numbers game

By Andrew Atkinson, CWCA

The number "6" can have many connotations. It can be the number of players your hockey team puts on the ice during a game, how many eggs you'll find when you open a half-dozen container, or how many points you're given when you score a touchdown.

But perhaps nowhere does the number "6" have more impact, at least in terms of your business, than when it comes to managing a claim for an employee who is injured on the job. That's where Injury Code #6, the designation for a "Medical Only" injury, comes into play. And it's a number well worth remembering because it is the designation you want your agent to implement as soon as possible for an injured employee. It's the designation that says you have done what it takes to have that employee return to work doing just about anything to minimize the financial impact on your bottom line, your company's productivity, and your company's ability to win bids. It is not a number to be taken lightly. Injuries other than "6" will increase your E-Mod score quickly, whereas the "6" designation will have minimal negative impact on your E-Mod.

Many employers believe that when an employee is getting paid by the insurance carrier they are actually "saving" money because the injured party is only receiving two-thirds of their pay once they are taken off the payroll books. After all, they think, "Isn't that why I pay insurance, so I don't have to pay injured employees?" But what many fail to realize is that the injury claim sits on their books for three years, like a festering sore, getting worse and worse, while the employee is sitting home watching daytime TV with personal injury ads telling them they should sue ("Call us today at 1-800-GET-PAID!").

Here's a good example. A worker on a construction site hurts his back and goes out on Workers' Comp. The primary insurance cost is $1,241, which stays on the Experience Mod for three years, totaling $3,723 in insurance costs as well as a higher Experience Mod. Now, if Mr. Bad Back had returned to work in any type of light duty, the actual loss penalty would have been reduced by 70% to $372, or $1,116 over the three years. A total reduction of $2,607 over the life of the claim. [Editor's note: In states that have adopted the experience rating adjustment (known as ERA states), when a claim is medical only (no lost-time or disability payments), the calculation of the mod reduces the value of the claim by 70%. But even in non-ERA states, the value of keeping claims in the medical-only status should not be overlooked. Medical-only claims that become lost-time claims will adversely affect an employer's Workers Comp costs.]

Obviously, the name of the game when it comes to managing claims properly is to have a well thought out Return-To... ANYTHING plan in place. But there are still other valuable pieces of the puzzle that must fall into place to minimize both recovery time for the employee and overall claim cost, such as:

  1. The Reporting Process. Timing is everything and if your company doesn't have an injury-reporting plan in place, one that everyone knows and understands, you are already at a disadvantage. If the injured employee reports a claim in a timely manner you immediately preserve evidence and are able to get treatment sooner (not to mention avoiding fines for not reporting claims quicker). Reporting the claim to your Workers' Comp insurance agent is also very important, as they are responsible for making sure any claim that can be medical only injury code "6," remains an injury code "6."
  2. Treating Injured Employees. It's important that the injured employee receive prompt medical attention, but it's equally important that the medical attention be put into the hands of a physician up to speed on occupational medicine, preferably one with a working knowledge of what it is your company does (this will help also when finding return-to-anything duties).
  3. Reporting a Claim and Investigation. Claims should be reported to the carrier the same day as the occurrence, so that the claims adjuster has the necessary time to do a thorough investigation. This will include such things as talking to witnesses to the injury, looking at any video that might be available, taking photos of the area, talking with co-workers about the mindset of the injured party prior to the accident (was he disgruntled?), etc. This will also help in lowering the overall costs of the claim and subsequent high premiums.
  4. Employee Communication. Active communication with injured employees is paramount during the claim process to make sure they understand fully about medical treatment and how their payroll will be impacted. This communication also includes keeping in touch with the worker, to let them know they are a valuable part of the company and you want them to return to work quickly. Everyone wants to feel wanted. And in a society tethered to cell phones, texts and emails, there is no excuse for a lack of communication. Sometimes an owner will think that an injured worker wants to come back to work since they are only receiving two-thirds of their pay. While that is true, payments from the carrier have no taxes withheld, whereas a normal paycheck from the employer is taxed at an overall average of 31%. You can see the financial motivation to return to work is not at all what many owners think it is.
  5. Back on the Job. In some ways, all the other points we've outlined are really just a precursor to this one, because until the employee is back in the fold, the premium clock is ticking at a high rate. You want to minimize the cost of the claim and temporary partial disability (TPD) payments, all of which can negatively impact the Experience Modifier. Identify activities that injured workers can do within your company, and make sure you have no less than 15 different things outlined, everything from watching safety videos to teaching other employees in a foreign language. Also important is that you work with someone who knows occupational medicine; otherwise that doctor is going to give you a list of what the worker can't do, when you want a list of what he can do. Additionally, it has been shown that employees returning to work for modified duty have faster recovery rates and are less likely to pursue attorney representation.

Managing claims doesn't have to be difficult, or frustrating, or a feeling that no matter what you do, every time an employee gets hurt on the job you will have to pay big bucks while watching your E-Mod score climb higher. True, there will be costs incurred with an injury; it's in many ways a part of doing business, particularly in an industry like construction, where any job site can be a virtual minefield of potential injuries. But by taking the necessary steps and being pro-active in getting your injured employee back to doing anything within their restrictions, you will mitigate the financial fallout that will occur should you ignore it. And when it comes to managing injury codes, what you don't know can, and will, hurt you.

Andrew Atkinson is a Masters Work Comp Advisor (MWCA) for Minard-Ames Insurance Services, Phoenix, AZ, and a frequent speaker to various trade associations and annual conferences.