Workers Comp Audit and Mod Reviews For Employers

Audit Dispute With No Explanation - A Great Way To Alienate Your Carrier and Agent

2013-05-22T13:19:00.001-04:00

We are quite often brought into a dispute that an employer has with their insurance carrier's audit. One caveat to disputing a premium audit is doing so without any documentation other than "the bill increased greatly" or "we are just paying too much for Workers Compensation insurance."

No carrier, Insurance Commissioner, or Rating Bureau (NCCI, WCIRB, etc.) has ever said to dispute a premium audit without reason was akin to fraud. However, we have noticed the insurance carriers are much more assertive when an audit dispute is undertaken with no reason or premium dispute calculation.

Delaying a premium audit bill payment by using a dispute is slowly becoming a thing of the past with many carriers. I had advised against this numerous times in this blog. A business owner's or risk manager's gut feeling that something is wrong with their policy or audit is very often a legitimate concern. No person or business knows your business better than you do overall.

We have not seen any carriers that will just cancel an insured because they have raised a dispute, even if there is no documentation as to the reason. That environment is changing somewhat as carriers have been very patient as they do not want to lose a customer - plain and simple.

However, an unfounded dispute puts the insurance agent in a predicament and can tarnish the relationship between a carrier and their insured employer.

The old "ducks in a row" adage is very accurate in these cases. Also, any undisputed premiums have to be paid regardless of the dispute. The calculation of the amount of the dispute is critical as the employer is supposed to pay the undisputed premium timely. That rule is in every Workers Comp policy written today.

Timely audit disputes with the reasons for the disagreement along with the proper calculations will go a very long way in proving your case to the insurance carrier.

Are Bill Review Companies and their PPO or MPN Networks Worth Their Fees?

2013-05-20T15:16:00.000-04:00

One of the most popular requests we receive is to analyze an employer's Workers Comp Preferred Provider network (PPO) and bill review charges. This is usually an add-on service to some of our other review offerings.

Bill review and medical network charges are becoming hot topics of discussions between Risk Managers various public and private employers. Bill reviews are usually based on the existence of a fee schedule in a certain state.

The different types of charges for fee schedule states are based on:

Header or per bill fee
Fee per line processed
% of savings
Network - PPO Fee
Combinations of the first four

Risk managers for self insured public entities are now even breaking out bill review and medical network charges separately from the TPA fees. This may be a good idea in some cases as the mixture of TPA claim processing fees can be confusing.

Many risk managers are now beginning to bid the medical processing fees as a separate Request For Proposal (RFP) or at least allowing bill review and PPO networks to bid separately from the TPA claims processing bids.

There is sorely missed area in the evaluation of a bill processing company for WC and their associated networks. The provider effectiveness measurement is actually what most adjusters use and not whether a provider is in a certain network.

The targeted amount for most Workers Comp PPO's is a reduction 15% of the bottom line bill which is #4 from the above list. If one medical provider has a great history of returning workers to gainful employment, does the 15% reduction really matter?

A great surgeon for example may end up saving much more on the claim than the 15%. One of the most disconcerting things that we see in files is when the adjuster has NO decision on the medical provider as it is pre-chosen by the network and location. This removes all loss reduction strategies on the medical part of the file, which of course affects the indemnity part of the file.

The best of both worlds is to have the most efficient and effective medical provider for Workers Compensation be in the medical bill provider's network. If the treating physician is able to return employees to work with no delays, the adjusters can keep the indemnity and medical reserves in check.

I did not mention the U&C (Usual and Customary) charges for the remaining states without a fee schedule. I will cover those next time.

Liability Insurance Premium Audit and Policy Reviews - A New Service

2013-05-14T22:34:00.002-04:00

We have been performing Workers Comp policy and premium audit reviews for many years. The need for liability audit and policy reviews became very apparent when I attended the NSIPA Conference a few years ago.

There a very few, if any companies that actually perform this type of review. The general liability insurance audits center more around proper certificates of insurance, especially in the construction industry.

I had thought that addressing liability insurance reviews may not be a good strategy until I read this article on GL audits from a northern California construction firm. The text from the articles is in the next two paragraphs. I do agree with the subsequent bloggers on the question of audits as unfair business practices.

My liability insurance companies audit methods seem unfair or at the least unforgiving. As many of your know our service regions are often very large and we often take in many remote sub-contractors to handle remote jobs. It's often not possible to get a new sub-contractors insurance certificates before they begin work.

Then after the fact the sub-contractor is unwilling to provide a copy unless additional work is available. Then at the end of the year you get audited and get charged for all your paid out revenues for your sub-contractors that you're unable to provide insurance certificates. Also, with some carriers you get also charged an audit premium for paid out material and equipment costs to sub-contractors. If you have had similar experience please contact me off-line. Some of this possibly is an unfair business practice on-part of the insurance carriers.

I will see if I can add some material from our two new liability auditors during this week.

A Great Return to Work Technique - Occupational Therapy - Is It Worth The Cost?

2013-05-09T11:51:00.000-04:00

Many years ago when I was "riding" a WC claims desk, a file in New Hampshire had a type of provider I had not seen before in my career. The physical therapist referred an injured employee to an Occupational Therapist.

I had thought this was just more physical therapy. Reviewing the Occupation Therapist notes created a few surprises. Some of the tasks were grabbing steel balls off a simulated conveyor belt and stacking these small blocks of wood into pre-cut patterns.

This seemed to be a large unnecessary cost to the file. I denied the bill upfront. The conversation I had with the OT was tense, but enlightening. After going through the complete OT plan for the injured employee, it was obvious that this type of therapy was valid and justified payment.

The Department of Labor has a great webpage on Occupational Therapists. OT's usually perform these tasks:

Observe patients doing tasks, ask the patient questions, and review the patient's medical history
Use the observations, answers, and medical history to evaluate the patient's condition and needs
Establish a treatment plan for patients, laying out the types of activities and specific goals to be accomplished
Help people with various disabilities with different tasks, such as helping an older person with poor memory use a computer, or leading an autistic child in play activities
Demonstrate exercises that can help relieve pain for people with chronic conditions, such as joint stretches for arthritis sufferers
Evaluate a patient’s home or workplace and identify how it can be better suited to the patient’s health needs
Educate a patient’s family and employer about how to accommodate and care for the patient
Recommend special equipment, such as wheelchairs and eating aids, and instruct patients how to use that equipment
Assess and record patients’ activities and progress for evaluating clients, for billing, and for reporting to physicians and other healthcare providers
The injured employee from New Hampshire with a saw cut injury to his hand returned to work after being out of work for 4 months on modified duty that became his full time job. In my humble opinion, the OT plan should be read by any personnel (adjusters, supervisors, auditors, etc.) involved in the file.

The return on investment on the file was 8 to 1 when looking at the reserve reduction versus the amount the OT charged for her services. OT has become more popular and understood over the years. Sometimes, the adjuster may have to bring up referring the injured employee to OT.

Rehabilitation Nurses As a Risk Management Technique - Sixteen and One Half Suggestions

2013-05-07T13:40:00.002-04:00

One of my long-standing Risk Management techniques is the prudent use of medical and vocational rehabilitation nurses (also known as case managers). A great in-field rehab nurse can save thousands if not tens of thousands of reserves and payouts on a file.

Our clients have actually sent in files that have reserves on them of over $200,000 (quite a large portion already paid) with no rehabilitation nurse assigned. We had a group of 20 of them last year.

The usual return on investment (ROI) has been 7 to 1 for the cases I have studied over the years. That is not a bad investment - if used properly.

Many years back I actually worked for a carrier that did not allow nurse assignments "as the adjuster" could handle it. In another insurance carrier position, I vehemently protested assigning a nurse to each file. That, to me, is overuse of a good risk management technique.

I have always used these suggestions as a guide for assigning medical rehabilitation nurses (if you have any more suggestions, please comment):

Make sure the nurse is familiar with the surrounding territory and medical practitioners involved with the file. Familiarity will save much time, aggravation, and $$.
Make sure that at the rehab nurse assignment time, the nurse receives ALL medical reports even if they are physical therapy notes, etc. This will save you many headaches down the road such as having to dig through a file to find a note to send that was crucial last month.
Similar to number one, make sure the driving times are no more than 1.5 hours each way. If a rehab nurse is sent three hours away, most companies do charge hourly and mileage. You do not want to receive a massive rehab bill. I still remember having to explain a $3,000 rehab bill to an insured client. That was not pretty.
There are triage rehab nurses for very serious claims. A great triage nurse will enhance the medical control from the hospital to MMI. Triage nurses are much more expensive than regular rehab nurses and worth it.
Listen to what your rehab nurse says as sometimes that info is not necessarily going to be in the report. It may seem trivial at the moment.
Read the rehab reports - usually a summary section if you are overloaded.
Rehab nurses are not adjusters and vice-versa.
Plaintiff attorneys are starting to scour over the reports presently. If you want to be on the same playing field as the attorney, you will have to read the report beyond the summary.
Some rehab nurses are better at certain things than others - almost goes without saying.
Along with #7, the claims staff needs to control the file. The rehab nurse needs to be a team member, not the controlling factor except possibly for triage nurses.
Do not move any rehab nurse calls or reports to the bottom of your to-do list. This can cost you dearly on the file.
Breaking with my communication recommendations, I would say that phone calls may be the best way to communicate with rehab nurses.
There are certain legalities that come with rehab nurses that vary night-and-day state to state. If you are dealing with a multi-state claim, this may become complicated.
The cardinal sin - forgetting to have the rehab nurse cc: the plaintiff attorney on all reports. This can sour any later dealing with the plaintiff attorneys. If you have an attorney on the file, then they should also be cc:'ed.
There are state-by-state peculiarities that may not agree with this list. I was looking at more of a national scope.
I know all fifteen of these as at some time, I have broken all of them - and sometimes lived to regret it.
Bonus - the rehab nurse usually summarizes the medical reports - a real timesaver if you do not want to read every medical report.

I did not exactly cover vocational case managers. The list would be very similar. This list was growing long enough.

Are Apologies The New Risk Management Technique?

2013-05-06T23:27:00.001-04:00

Claims Magazine recently featured an article pondering the benefits of apologies by claims adjusters. Shockingly, there are 37 states that prevent apologies from an insurance company being held against them in court.

The article centered around property claims. A quote from the article "Depending on the timing and authenticity, an apology can potentially reduce the likelihood of a lawsuit being filed and result in reduced defense costs and damages. "

Apologies in the Workers Comp arena would seem to have very little effect. Workers
Comp claimants have more repetitive contact with their adjusters over a longer period of
time. Apologizing for a mistake early in the process would be that beneficial.

There are no known states that provide a "safe harbor" for Workers Comp adjuster apologies. Workers Compensation is handled in most states by an Industrial Accident Board or an Industrial Commission. There are no safe harbors for apologies to Workers Comp claimants.

There are many more payments made for weekly benefits and medical bills when compared to a property liability. Adjusters may find it much easier to admit the mistake and verbally apologize. Formally apologizing would be a mistake that could likely be held against the adjuster later in the file.

Adjusters are the leaders of the file. Apologizing may leave the injured employee less than confident concerning the adjuster. If the injured employee loses confidence in their adjuster, the easiest place to turn is to a plaintiff attorney to make sure they are receiving the proper benefits.

A very late TTD check is quickest way for an adjuster or claims staff to cause a loss of confidence. If the adjuster cannot process a check timely. the injured employee will more readily mistrust the actions of the WC claims adjuster.

The adjuster is the main communicator on the file. One has to wonder if an apology should ever be one of the communications.

Oklahoma - Is Opting Out Really Worth It?

2013-05-02T03:55:00.000-04:00

Oklahoma made a very bold move this week to allow opt out programs for Workers Compensation coverage. "Coverage" may not be the right term as no insurance carriers will be involved with the opted-out companies.

One of the concerns with opting out is the Affordable Health Care Act has provisions for Summary Plan Descriptions (SPD's). Employers provide these to their new-hire employees. The SPD's have a breakdown of all provided benefits.

The WC benefits will be listed in opted-out companies' SPD's. SPD's have many federal rules on areas such as the language/terms used in SPD. In other words the SPD's will actually move WC from state mandated rules to federal rules. The federal rules allow much more leeway in employees' benefits.

Even though the SPD's will be constructed and applied according to federal rules, the opted-out employers will have a greater input as to how benefits are provided. The new benefit that replaces WC is no longer actually WC. The new benefit will be more of a accident and disability internal benefit.

The Oklahoma employers will enjoy the benefit of directing care and providing benefits which will likely improve the bottom line of most companies that do opt out. One company that had opted out in Texas and one that was planning to do the same in Oklahoma had presented their views at the LRP Las Vegas Workers Comp conference last November. The presentations were eye-opening to say the least.

The presentations seemed to have a small amount of drawbacks. The ones that came to mind were:

SPD's are federally regulated
SPD's fall under the jurisdiction of the IRS
The Affordable Healthcare Act (Obamacare) has SPD provisions - the SPD's are under the jurisdiction of Obamacare
The employer loses their no-fault benefit as under WC - employees can employer directly with no upper limits on damages
The Law of Large Numbers - only large companies can afford to opt out
Using another type of policy to cover the benefits lessens the employer's input to the claims process
Will employees have no backstop to certain egregious employers?
The court system will likely have a large amount of input over the next few years

There are many positive developments for Oklahomans. One of the most important developments is the opt out program has been successful in Texas. The blueprint was already in place. Oklahoma will not have new ground to cover.

California's WCIRB Produces Massive SB 863 Analysis Plan

2013-04-30T22:09:00.000-04:00

California's Workers Compensation Insurance Rating Bureau (WCIRB) has recently produced a massive monitoring study on Senate Bill 863. The monitoring plan is basically an outline and specifications on future SB 863 studies. The outline itself is 23 pages in length.

The plan is separated into Indemnity and Medical benefit delivery changes. The studies that are planned for publication in 2013 include:

Indemnity Claim Frequency Changes
Liens
Surgical Implant Hardware
Ambulatory Surgical Care Centers (ASC's)
% of Medical Care Provided in Medical Provider Networks (MPN's)
Independent Bill Reviews

The most discussed study results will likely be liens. However, the one that should be interesting and may possibly apply outside of CA is the medical treatment provided by MPN's. Proper use of employer directed medical care is control of the claim and lower costs to provide an acceptable level of medical care. MPN's are CA's version of medical treatment panels in other states.

States that do not have employer directed medical care or medical treatment panels have been shown to be much more expensive to provide applicable care.

Surgical implant hardware analysis may produce unexpected results. This type of medical treatment has rarely been studied at length. Implanted hardware has been a very controversial topic for many years.

ASC's have long been a controversial topic in certain states. Outpatient treatment were allowed to be off-fee-schedule which caused much inflated charges to be incurred by TPA's, carriers, and in turn employers.

Worker Classification Confusion With IRS Amnesty Program

2013-04-29T22:28:00.000-04:00

The IRS has initiated an amnesty program for Worker Classifications. This is not the same as Workers Compensation Classification codes. The amnesty program was designed for whether workers are independent contractors or employees. This is a great article on the IRS amnesty program. These types of employees or contractors are also sometimes referred to 1099 employees or subcontractors.

Workers Compensation Classification Codes are for example:

8810 Administrative Assistant or Clerical
7219 Trucking and Transportation (California)

The IRS has never actually been involved in a classification code dispute. The IRS, of course, is more concerned with the unpaid withholding taxes that are filed quarterly on Form 941. Your state taxing authority and the IRS share tax data.

We sometimes receive questions on classification codes as some employers seem to think that if they question their policies then they could be violating some IRS regulation. That is not true.

One of the newest developments is the taxing authorities in each state now share data with the state insurance departments. We have not seen very many cases where a Workers Compensation audit finding having resulted in a tax bill.

This may change in the near future as states such as New Jersey and Connecticut have begun sharing data between all state departments after passing new laws on data sharing. North Carolina has just created the GBICC which is basically a data sharing department.

Texas and Oklahoma May Get An Opt Out Benefit Surprise

2013-04-25T10:10:00.002-04:00

Oklahoma and Texas will be the two states with opt out provision in their Workers Comp Laws. One of the areas of concern with the upcoming passage of the opt out provisions is that all benefits will be subject to Obamacare in 2014.

Section 2715 of Obamacare is known as the SPD section. All benefits that are provided to employees by their employer must be in the SPD (Summary Plan Description). As Workers Comp in an opt out program is no longer actually a Workers Comp program, the benefits will be a health and disability policy administered by the employer.

This may be a development of little consequence, however, as each section of the Health Act will only be known in 2014 and forward. Our Supreme Court says it is a tax - but regardless the SPD's will be directly monitored and enforced -(by the IRS?)

One Texas and two Oklahoma insureds are considering the opt out programs once the bill is signed by Oklahoma's Governor. All three companies did express this concern.

There are other areas of the Health Act that opt outs may be subject to in the future. The companies may want to consider testing the water before "jumping into the river." In other words, companies in Oklahoma and Texas that decide to use the opt out method may actually be Federalizing their Workers Comp benefits.

The crystal ball on the future of opt outs may still show these types of programs as the future for Workers Compensation. Jumping right in may prove the water to be very cold.

Oklahoma's Workers Comp Opt Out Program May Be Trumped By Obamacare

2013-04-25T00:18:00.002-04:00

Oklahoma's new opt out legislation is working its way through the very long path to becoming law sometime in 2013. The likely passage of the bill has created quite a buzz on the Workers Comp airwaves.

One of the more interesting areas of the new Oklahoma opt out program is that the Workers Comp benefits must be provided under a SPD (Summary Plan Description). The SPD is the description of all benefits provided to each employee such as health benefits.

The SPD's are usually provided at the start of employment in most cases. As the SPD's provide information on health benefits and other federally legislated benefits, the Obamacare law may cause more problems and confusion with Workers Comp benefits under the opt out plans.

The Oklahoma Opt Out Bill will likely be signed by the Governor in the coming weeks. The SPD's contents are often dictated by Federal Laws. One of the Risk Managers for an employer that is heavily pushing for the opt out program had mentioned this point previously.

The Obamacare bill under Section 2715 - specifically address SPD's calling them summaries. The most important question to ask - If an Oklahoma employer opts out of Workers Comp, then would the benefits then be considered a health and disability policy? The answer is hopefully not, but likely so.

Section 2715 of the bill has been included below.

‘‘SEC. 2715. DEVELOPMENT AND UTILIZATION OF UNIFORM EXPLANATION OF COVERAGE DOCUMENTS AND STANDARDIZED

DEFINITIONS.

‘‘(a) IN GENERAL.—Not later than 12 months after the date of enactment of the Patient Protection and Affordable Care Act, the Secretary shall develop standards for use by a group health
plan and a health insurance issuer offering group or individual health insurance coverage, in compiling and providing to enrollees a summary of benefits and coverage explanation that accurately
describes the benefits and coverage under the applicable plan or coverage.

In developing such standards, the Secretary shall consult with the National Association of Insurance Commissioners (referred to in this section as the ‘NAIC’), a working group composed of representatives of health insurance-related consumer advocacy organizations, health insurance issuers, health care professionals, patient advocates including those representing individuals with limited English proficiency, and other qualified individuals.

‘‘(b) REQUIREMENTS.—The standards for the summary of benefits and coverage developed under subsection (a) shall provide for the following:

‘‘(1) APPEARANCE.—The standards shall ensure that the summary of benefits and coverage is presented in a uniform format that does not exceed 4 pages in length and does not include print smaller than 12-point font.

‘‘(2) LANGUAGE.—The standards shall ensure that the summary is presented in a culturally and linguistically appropriate manner and utilizes terminology understandable by the average plan enrollee.

‘‘(3) CONTENTS.—The standards shall ensure that the summary of benefits and coverage includes—
‘‘(A) uniform definitions of standard insurance terms and medical terms (consistent with subsection (g)) so that consumers may compare health insurance coverage and understand the terms of coverage (or exception to such coverage);

‘‘(B) a description of the coverage, including cost sharing for—
‘‘(i) each of the categories of the essential health benefits described in subparagraphs (A) through (J)
of section 1302(b)(1) of the Patient Protection and Affordable Care Act; and
‘‘(ii) other benefits, as identified by the Secretary;

‘‘(C) the exceptions, reductions, and limitations on coverage;

‘‘(D) the cost-sharing provisions, including deductible, coinsurance, and co-payment obligations;

‘‘(E) the renewability and continuation of coverage provisions;

‘‘(F) a coverage facts label that includes examples to illustrate common benefits scenarios, including pregnancy and serious or chronic medical conditions and related cost sharing, such scenarios to be based on recognized clinical practice guidelines;

‘‘(G) a statement of whether the plan or coverage—

‘‘(i) provides minimum essential coverage (as defined under section 5000A(f) of the Internal Revenue
Code 1986); and
‘‘(ii) ensures that the plan or coverage share of the total allowed costs of benefits provided under the
plan or coverage is not less than 60 percent of such costs;

‘‘(H) a statement that the outline is a summary of the policy or certificate and that the coverage document itself should be consulted to determine the governing contractual provisions; and

‘‘(I) a contact number for the consumer to call with additional questions and an Internet web address where a copy of the actual individual coverage policy or group certificate of coverage can be reviewed and obtained.

‘‘(c) PERIODIC REVIEW AND UPDATING.—The Secretary shall periodically review and update, as appropriate, the standards developed under this section.
‘‘(d) REQUIREMENT TO PROVIDE.—
‘‘(1) IN GENERAL.—Not later than 24 months after the date of enactment of the Patient Protection and Affordable Care
Act, each entity described in paragraph (3) shall provide, prior to any enrollment restriction, a summary of benefits and coverage explanation pursuant to the standards developed by the Secretary under subsection (a) to—
‘‘(A) an applicant at the time of application;
‘‘(B) an enrollee prior to the time of enrollment or
reenrollment, as applicable; and
‘‘(C) a policyholder or certificate holder at the time of issuance of the policy or delivery of the certificate.
‘‘(2) COMPLIANCE.—An entity described in paragraph
(3) is deemed to be in compliance with this section if the summary of benefits and coverage described in subsection (a) is provided in paper or electronic form.
‘‘(3) ENTITIES IN GENERAL.—An entity described in this
paragraph is—
‘‘(A) a health insurance issuer (including a group health plan that is not a self-insured plan) offering health insurance coverage within the United States; or
‘‘(B) in the case of a self-insured group health plan, the plan sponsor or designated administrator of the plan
(as such terms are defined in section 3(16) of the Employee
Retirement Income Security Act of 1974).
‘‘(4) NOTICE OF MODIFICATIONS.—If a group health plan or health insurance issuer makes any material modification in any of the terms of the plan or coverage involved (as defined for purposes of section 102 of the Employee Retirement Income Security Act of 1974) that is not reflected in the most recently provided summary of benefits and coverage, the plan or issuer shall provide notice of such modification to enrollees not later than 60 days prior to the date on which such modification will become effective.
‘‘(e) PREEMPTION.—The standards developed under subsection
(a) shall preempt any related State standards that require a summary of benefits and coverage that provides less information to consumers than that required to be provided under this section,
as determined by the Secretary.
‘‘(f) FAILURE TO PROVIDE.—An entity described in subsection
(d)(3) that willfully fails to provide the information required under this section shall be subject to a fine of not more than $1,000 for each such failure. Such failure with respect to each enrollee
shall constitute a separate offense for purposes of this subsection.
‘‘(g) DEVELOPMENT OF STANDARD DEFINITIONS.—
‘‘(1) IN GENERAL.—The Secretary shall, by regulation, provide for the development of standards for the definitions of terms used in health insurance coverage, including the insurance-related terms described in paragraph (2) and the medical terms described in paragraph (3).

‘‘(2) INSURANCE-RELATED TERMS.—The insurance-related terms described in this paragraph are premium, deductible, co-insurance, co-payment, out-of-pocket limit, preferred provider, non-preferred provider, out-of-network co-payments, UCR (usual, customary and reasonable) fees, excluded services, grievance and appeals, and such other terms as the Secretary determines are important to define so that consumers may compare health insurance coverage and understand the terms of their
coverage.

‘‘(3) MEDICAL TERMS.—The medical terms described in this paragraph are hospitalization, hospital outpatient care, emergency room care, physician services, prescription drug coverage, durable medical equipment, home health care, skilled nursing care, rehabilitation services, hospice services, emergency medical transportation, and such other terms as the Secretary determines are important to define so that consumers may compare the medical benefits offered by health insurance and
understand the extent of those medical benefits (or exceptions
to those benefits).

Wrecking A Workers Comp System - Ruling By Nebraska Supreme Court

2013-04-23T19:00:00.002-04:00

The following case could be considered more social legislation such as the infamous Florida decision that can actually wreck a Workers Comp system. For readability, I decided to include all of the Nebraska Supreme Court decision. You can also find the case in PDF form here.

This will have a ripple effect across many Workers Comp cases in Nebraska. The insurance carriers have likely not reserved for this type of development

The decision will be compacted for readability in the next few days. The main point is that a former employer is responsible for wage benefits even though the employee left his former employee for a higher paying job. Please see the below bolded info.

Pat Zwiener, appellee and cross-appellant,

v. Becton Dickinson-East, appellant

and cross-appellee.

___ N.W.2d ___

Filed April 19, 2013. No. S-12-563.

1. Workers’ Compensation. Whether a plaintiff in a Nebraska workers’ compensation case is totally disabled is a question of fact.

2. Workers’ Compensation: Evidence: Appeal and Error. In testing the sufficiency of the evidence to support the findings of fact in a workers’ compensation case, every controverted fact must be resolved in favor of the successful party and the successful party will have the benefit of every inference that is reasonably deducible from the evidence.

3. Workers’ Compensation: Words and Phrases. Temporary disability is the period during which the employee is submitting to treatment, is convalescing, is suffering from the injury, and is unable to work because of the accident.

4. Workers’ Compensation. Total disability exists when an injured employee is unable to earn wages in either the same or a similar kind of work he or she was trained or accustomed to perform or in any other kind of work which a person of the employee’s mentality and attainments could perform.

5. ____. The level of a worker’s disability depends on the extent of diminished employability or impairment of earning capacity, and does not directly correlate to current wages.

6. ____. An employee’s return to work at wages equal to those received before the injury may be considered, but it does not preclude a finding that the employee is either partially or totally disabled.

7. ____. Earning capacity determinations should not be distorted by factors such as business booms, sympathy of a particular employer or friends, temporary good luck, or the superhuman efforts of the claimant to rise above his or her crippling handicaps.
Nebraska Advance Sheets

8. ____. If payment of wages upon an employee’s return to work was intended to be in lieu of indemnity benefits for which the employer accepted responsibility, then credit for those wages is allowed.

9. Workers’ Compensation: Rules of Evidence. As a general rule, the Nebraska Workers’ Compensation Court is not bound by the usual common-law or statutory rules of evidence.
10. Workers’ Compensation: Evidence: Due Process: Appeal and Error. Subject to the limits of constitutional due process, the admission of evidence is within the discretion of the Nebraska Workers’ Compensation Court, whose determination in this regard will not be reversed upon appeal absent an abuse of discretion.

Appeal from the Workers’ Compensation Court: Thomas E. Stine, Judge. Affirmed in part, and in part reversed and remanded with directions.
Abigail A. Wenninghoff, of Larson, Kuper & Wenninghoff, P.C., L.L.O., for appellant.
Ryan C. Holsten, of Atwood, Holsten, Brown & Deaver Law Firm, P.C., L.L.O., for appellee.
H eavican, C.J., Wright, Connnnolly, Stephan, McCormack, and Cassel, JJ.
McCormack, J.

NATURE OF CASE

The employer appeals from an award of the Nebraska Workers’ Compensation Court, and the employee cross-appeals. We hold that an employee who leaves a job with an employer responsible for an injury in order to pursue more desirable employment does not waive temporary total disability benefits simply because the employer responsible for the injury would have accommodated light-duty restrictions during postsurgical recovery periods necessitated by the injury.

BACKGROUND

Pat Zwiener filed a petition against Becton Dickinson-East (Becton) in the compensation court, seeking temporary total disability benefits, compensation for certain unpaid medical bills, mileage expenses, and attorney fees under Neb. Rev. Stat. § 48-125 (Reissue 2010). Zwiener had not yet reached maximum medical improvement and did not seek a permanent impairment rating.
Nebraska Advance Sheets

ZWIENER v. BECTON DICKINSON-EAST 737
Cite as 285 Neb. 735

Zwiener suffered a shoulder injury arising out of and in the course of his employment with Becton on August 20, 2009. The injury was originally diagnosed as a strain. Zwiener was treated conservatively with corticosteroid injections, anti-inflammatories, and physical therapy. Zwiener was advised that he could continue working without restrictions.

On March 12, 2010, Zwiener resigned his employment with Becton and began working for Sapp Brothers, Inc., as a driver. The choice of new employment was unrelated to the injury. Zwiener explained that he liked being outdoors and that the pay was better. According to Becton, Zwiener knew surgery for the injury might be a possibility. But Zwiener’s diagnosis and prognosis were, at the time he left Becton, uncertain.

Zwiener’s shoulder injury continued to bother him, and he obtained a second opinion. The injury was eventually determined to consist of a tear to the right rotator cuff and nearby tendons. After further diagnostic tests, surgery was recommended. The recovery period from the surgery would require that Zwiener not use his right arm. Sapp Brothers was unable to accommodate that restriction.

Concerned that he would be without a wage during the recovery period, Zwiener tried to postpone the surgery until August 2010. Despite a medical opinion that waiting a few months would not adversely affect the outcome of the surgery, Becton insisted that Zwiener have the surgery right away if he wanted to ensure it was compensable. The surgery took place on May 10, 2010.

On May 12, 2010, Zwiener was released to work with the restriction of not using his right arm. Because Sapp Brothers could not accommodate this restriction, Zwiener did not work during the period of the restriction. Zwiener was not released to return to work at Sapp Brothers until July 8.

Becton agreed to pay for the surgery and related medical expenses, but it denied payment of any temporary total disability benefits during the recovery period for the surgery. Becton reasoned that if Zwiener had stayed employed there, Becton would have accommodated Zwiener’s recovery restrictions and he would have been able to continue to receive a wage during that period. Becton has an aggressive return-to-work policy designed to put its injured employees back to work rather than have them remain off work collecting workers’ compensation benefits.

Unfortunately, Zwiener’s symptoms were not completely alleviated by the first surgery. Eventually, a second surgery was recommended and scheduled for January 9, 2012. Zwiener testified that Becton had denied compensation for the recommended magnetic resonance imaging to determine whether the first surgery had been successful and whether another surgery was necessary. Zwiener understood that Becton would not approve the second surgery, so he submitted the second surgery for payment through his personal health care insurer instead.

Anticipating Becton’s denial of temporary total disability benefits, on December 22, 2011, Zwiener’s counsel wrote to Becton’s counsel stating that Zwiener would be able to work for Becton, with restrictions, during the recovery period of his surgery. Zwiener’s counsel asked that Becton inform Zwiener whether it would allow this and how to proceed. Becton did not respond. At the workers’ compensation hearing, Becton objected to the letter as hearsay. The objection was overruled.

The second surgery was performed on January 9, 2012. Zwiener’s physician recommended no work until January 30. Zwiener was released to work with restrictions on January 31. But Sapp Brothers was again unable to accommodate the restrictions, which included Zwiener’s not being able to use his right arm.

Zwiener’s counsel again wrote to Becton’s counsel, asking that Becton state whether it would allow Zwiener to work light duty at Becton during the postsurgery recovery period. Becton did not respond. At the hearing, Becton’s hearsay objection to this letter was overruled.

Becton denied temporary total disability benefits for the recovery period of the second surgery. Zwiener was not able to return to work at Sapp Brothers until April 25, 2012.

At the hearing before the compensation court, the parties agreed that Becton had voluntarily paid Zwiener $8,275.37, pursuant to a permanent partial impairment rating after the first surgery. The parties agreed that this amount should be credited against any award and that, accordingly, no waiting-time penalties should be incurred.

The compensation court awarded Zwiener temporary total disability benefits for the periods he was unable to work due to his postsurgery restrictions. The court found no merit to Becton’s position that if an employee is no longer working at Becton and cannot take advantage of Becton’s return-to-work policy, then that employee is not entitled to temporary total disability benefits. The court explained that an employee is not “eternally bound” to remain employed with the employer responsible for the injury in order to receive the workers’ compensation benefits to which the employee is entitled by statute.

Furthermore, the court explained that “[i]t is not logical to mandate an internal return-to-work policy upon someone who is no longer an employee of the entity issuing the policy.”
The court found that Becton had failed to pay outstanding medical expenses of a community hospital in the amount of $2,173 and of an orthopaedic hospital in the amount of $1,222.18. In addition, Becton was ordered to reimburse Zwiener’s insurer for $5,565.86 in payments it made for medical expenses related to the second surgery. The court determined that Becton owed Zwiener $26.34 in mileage.
The court awarded attorney fees to Zwiener in the amount of $5,155.

This was the total amount of attorney fees Zwiener’s attorney demonstrated were incurred in bringing Zwiener’s workers’ compensation claim against Becton. The court noted that there was no reasonable controversy as to the compensability of the temporary total disability benefits and, also, that certain medical bills and mileage expenses were paid late. The court did not calculate the attorney fee award specifically in relation to the amount of untimely paid medical bills, because it also considered attorney fees due for the denial of temporary total disability benefits.

The court awarded 50 percent waiting-time penalties on all amounts of temporary total disability due and owing. No credit was given for the $8,275.37 Becton already paid. Becton appeals and Zwiener cross-appeals from the award.

ASSIGNMENTS OF ERROR

Becton assigns that the compensation court erred in (1) finding that Zwiener was entitled to temporary total disability benefits, (2) finding that Zwiener is entitled to waiting-time penalty benefits and for failing to give Becton credit for benefits paid to date, (3) awarding attorney fees of $5,155, and (4) allowing the hearsay evidence contained in the letters written by Zwiener’s attorney, an exhibit pertaining to late medical bills, and the exhibit outlining attorney fees incurred in bringing Zwiener’s claim.

On cross-appeal, Zwiener asserts that the court erred in failing to find that medical bills paid to OrthoWest in the total amount of $9,308 were also untimely paid.

STANDARD OF REVIEW

[1,2] Whether a plaintiff in a Nebraska workers’ compensation case is totally disabled is a question of fact.1 In testing the sufficiency of the evidence to support the findings of fact in a workers’ compensation case, every controverted fact must be resolved in favor of the successful party and the successful party will have the benefit of every inference that is reasonably deducible from the evidence.2

ANALYSIS
Entitlement to Temporary Total Disability

[3,4] Temporary disability is the period during which the employee is submitting to treatment, is convalescing, is suffering from the injury, and is unable to work because of the accident.3 Total disability exists when an injured employee is unable to earn wages in either the same or a similar kind of work he or she was trained or accustomed to perform or in any other kind of work which a person of the employee’s mentality and attainments could perform.4
1 Manchester v. Drivers Mgmt., 278 Neb. 776, 775 N.W.2d 179 (2009).
2 See id.
3 Frauendorfer v. Lindsay Mfg. Co., 263 Neb. 237, 639 N.W.2d 125 (2002).
4 Id.

[5-7] We have explained that the level of a worker’s disability depends on the extent of diminished employability or impairment of earning capacity, and does not directly correlate to current wages.5 A return to work at wages equal to those received before the injury may be considered, but it does not preclude a finding that the employee is either partially or totally disabled.6 Earning capacity determinations should not be distorted by factors such as “‘business booms, sympathy of a particular employer or friends, temporary good luck, or the superhuman efforts of the claimant to rise above his crippling handicaps.’”7

[8] But, if payment of wages upon a return to work was intended to be in lieu of indemnity benefits for which the employer accepted responsibility, then credit for those wages is allowed.8 Becton did not pay wages to Zwiener during the periods he was convalescing from the two surgeries necessitated by his injury because, had Zwiener not left his employment there, Becton would have paid wages for light-duty work in lieu of temporary total disability benefits. Becton believes an employee waives temporary total disability benefits when the employee moves on from a job that could have accommodated medical restrictions. We disagree.

We have never held that an employee who ceases to work for the employer responsible for the injury somehow forfeits temporary disability benefits because the employer would have accommodated light-duty work in lieu of benefits. In fact, in Guico v. Excel Corp.9 and Manchester v. Drivers Mgmt.,10 we
5 See Heiliger v. Walters & Heiliger Electric, Inc., 236 Neb. 459, 461 N.W.2d 565 (1990).
6 See id.
7 Id. at 471, 461 N.W.2d at 574 (quoting 2 A. Larson, The Law of Workmen’s Compensation § 57.51(a) (1989)).
8 See, Anderson v. Cowger, 158 Neb. 772, 65 N.W.2d 51 (1954); Godsey v. Casey’s General Stores, 15 Neb. App. 854, 738 N.W.2d 863 (2007). See, also, 4 Arthur Larson & Lex K. Larson, Larson’s Workers’ Compensation Law § 82.01 (2011).
9 Guico v. Excel Corp., 260 Neb. 712, 619 N.W.2d 470 (2000).
10 Manchester v. Drivers Mgmt., supra note 1. held that employees who were fired for cause did not forfeit their temporary total disability benefits simply because their employers would have provided light-duty work.

In Guico, the employee lost his light-duty work because he was fired for safety violations associated with the injury. The employee in Manchester similarly was fired and lost her light-duty work because of negligence in the accident leading to her injury. Becton apparently relies on our observation in Guico that some jurisdictions hold that employees lose their temporary disability benefits if their employer provided them with light-duty work and if they were fired and lost that accommodation because of misconduct unrelated to the injury.11 But we did not opine on whether we would adopt such a rule if such facts were presented, and such facts are not presented here.

In Guico, we noted that, generally, when determining the extent of disability, “‘the fact of termination or the reason for it is irrelevant.’”12 Our court has consistently given the Nebraska Workers’ Compensation Act13 a liberal construction to carry out justly its beneficent purpose to provide an injured worker with prompt relief from the adverse economic effects caused by a work-related injury or occupational disease.14 Furthermore, we recognize that employer-employee relationships are generally at-will and that the employee is free to leave an employment relationship without recourse by the employer—just as the employer is free to terminate the relationship, so long as it does not act unlawfully or in breach of contract.15

Adopting Becton’s waiver argument would not only undermine the beneficent purposes of the Nebraska Workers’ Compensation Act, it would effectively bind workers to
11 See Guico v. Excel Corp., supra note 9.
12 Id. at 723, 619 N.W.2d at 479 (quoting Aldrich v. ASARCO, Inc., 221 Neb. 126, 375 N.W.2d 150 (1985)).
13 Neb. Rev. Stat. §§ 48-101 to 48-1,117 (Reissue 2010).
14 See, Bacon v. DBI/SALA, 284 Neb. 579, 822 N.W.2d 14 (2012); Visoso v. Cargill Meat Solutions, 18 Neb. App. 202, 778 N.W.2d 504 (2009).
15 See Trosper v. Bag ’N Save, 273 Neb. 855, 734 N.W.2d 704 (2007).

employers responsible for the injury until full recovery, thereby limiting at-will employees’ mobility and freedom to choose other work opportunities. Nothing in the language of the act or public policy supports the waiver rule proposed by Becton.
The compensation court was not clearly wrong in determining that Zwiener had a total loss of earning capacity during the time he was convalescing from the surgeries necessitated by his work-related injury. We affirm the compensation court’s award of temporary total disability benefits in the amount of $11,308.05.

Credit, Attorney Fees, and Waiting-Time Penalties

But the court failed to give Becton credit against this award for $8,275.37 already paid to Zwiener. The parties had stipulated this amount should be credited against the award, and they agree on appeal that the compensation court erred in failing to give such credit. The parties agree that because the compensation court failed to give Becton credit for $8,275.37 paid, it erred in awarding waiting-time penalties. Zwiener never sought waiting-time penalties. We reverse with directions for the compensation court to give Becton credit for the $8,275.37 paid and to vacate the waiting-time penalties.

The parties further agree that because of the failure to give Becton credit for the $8,275.37 payment, the compensation court improperly calculated the attorney fee award. At oral argument, Zwiener’s counsel explained that due to the $8,275.37 payment, he had not sought attorney fees as a penalty for Becton’s failure to pay temporary total disability benefits. Zwiener’s counsel conceded at oral argument that the only basis for an attorney fee award here is the late payment of medical bills and that the case must be remanded for a determination as to what portion of the attorney fees is properly attributable to the pursuit of the late medical bills. Because Zwiener has waived any claim to an attorney fee award unrelated to the late medical bills, we reverse, and remand the cause for a redetermination of the attorney fee award based only on the untimely payment of medical bills.

The parties agree that the compensation court should redetermine attorney fees based on the standards set forth in Harmon v. Irby Constr. Co.16 In Harmon, an employer had conceded all points of compensability of the employee’s injury except for a $30 per diem payment that the employee wished to add to his weekly wage calculation. The employee also alleged that the employer had failed to pay one $165 medical bill within 30 days after notice of the obligation for payment. We rejected the employee’s argument concerning the $30 per diem payment, but found the medical bill issue meritorious.

We noted, however, that this was the only delinquent bill and that the employer had made timely medical payments in excess of $50,000. Of the 36.2 hours of work documented by the employee’s attorney, only a fraction could be directly attributed to collection of that one delinquent bill. Under such circumstances, we held that a court calculating attorney fees pursuant to § 48-125 must pay particular attention to the amount of the legal work performed in relation to the amount of the unpaid medical bill and the amount of the unpaid medical bill in relation to the workers’ compensation award received.17 “Allowing a claimant to recover all of his or her attorney fees based on the failure of a defendant to pay such a bill would provide the claimant with a windfall.”18

The only dispute between Zwiener and Becton concerning attorney fees is the amount of unpaid medical bills that the court should consider in making its redetermination. Zwiener argues on cross-appeal that the compensation court erred in failing to find an additional $9,308 in late medical bills to Orthowest. Becton did not file a reply brief to Zwiener’s cross-appeal, but apparently believes that the attorney fees should be calculated only on the compensation court’s finding of $1,890.13 in untimely medical bills and expenses.
16 Harmon v. Irby Constr. Co., 258 Neb. 420, 604 N.W.2d 813 (1999).
17 Id.
18 Id. at 430, 604 N.W.2d at 821.
Although Zwiener presented evidence that $9,308 in OrthoWest medical bills were paid 79 days after treatment, the compensation court did not make any finding as to whether the OrthoWest bills were untimely paid after notice, thus falling under the mandatory attorney fee provision found in § 48-125. We direct the court to make such a determination on remand, before recalculating the attorney fee award.

Evidentiary Objections

We find no merit to Becton’s remaining assignment of error relating to evidentiary objections. Becton objected to exhibit 1 as hearsay, exhibit 3 on foundation and hearsay, and exhibit 5 on relevance, foundation, and hearsay grounds.

Exhibit 1 was a letter from Zwiener’s attorney stating that Zwiener was willing to work light duty while convalescing. Becton’s objection to that exhibit is moot. The letter is irrelevant to our holding that Zwiener did not waive temporary total disability by leaving his employment with Becton, and it was not the basis for the compensation court’s award of temporary total disability benefits.
Exhibit 3 set forth the fees Zwiener’s attorney incurred in bringing the suit. Becton does not explain how the attorney’s own affidavit as to his fees lacked foundation. And although exhibit 3 may include “all aspects of preparing the case,”19 it is not thereby inadmissible. The compensation court on remand will consider the exhibit in light of Harmon,20 as set forth above.

Finally, the court did not abuse its discretion in allowing approximately 200 pages of “repetitive”21 documents pertaining to medical bills in exhibit 5. Becton’s principal objection was that the demand letters in exhibit 5 contained hearsay. It can be presumed22 that the compensation court considered the
19 Brief for appellant at 22.
20 Harmon v. Irby Constr. Co., supra note 16.
21 Brief for appellant at 22.
22 See, e.g., State v. Orduna, 250 Neb. 602, 550 N.W.2d 356 (1996).

letters as evidence of notice, rather than for the truth of the matters asserted.23
[9,10] As a general rule, the compensation court is not bound by the usual common-law or statutory rules of evidence.24 Subject to the limits of constitutional due process, the admission of evidence is within the discretion of the compensation court, whose determination in this regard will not be reversed upon appeal absent an abuse of discretion.25 We find no reversible error in the admission of the exhibits complained of by Becton in this appeal.

CONCLUSION

We affirm the award of temporary total disability benefits. We reverse the failure to credit disability payments made by Becton, the award of waiting-time penalties, and the amount of the attorney fee award. Pursuant to the agreement of the parties, we remand the cause for a redetermination of the attorney fees that should be awarded in connection with untimely paid medical bills only. On remand, we also direct the court to determine whether the OrthoWest bills fall under § 48-125.

Aff firmed in part, and in part reversed
and remanded with directions.
Miller-Lerman, J., participating on briefs.

23 See, Werner v. County of Platte, 284 Neb. 899, 824 N.W.2d 38 (2012); State v. McCave, 282 Neb. 500, 805 N.W.2d 290 (2011); Alliance Nat. Bank v. State Surety Co., 223 Neb. 403, 390 N.W.2d 487 (1986).
24 See Tapia-Reyes v. Excel Corp., 281 Neb. 15, 793 N.W.2d 319 (2011).
25 Veatch v. American Tool, 267 Neb. 711, 676 N.W.2d 730 (2004).

Presentation Tomorrow in Raleigh On How to Reduce Experience Mods

2013-04-23T18:17:00.002-04:00

I will be presenting on the new NCCI or NC Rate Bureau Mod Calculation changes later this month at Job Ready Services in Raleigh. You can register here

April Lunch & Learn:

Wednesday, April 24, 2013

12:00pm-1:00pm

Topic: E-Mod Rate Changes: How to Reduce Worker's Comp Premiums

Speaker: James Moore, JL Risk Management Consultants, Inc.

Cost: $10.00

For more info, go here.

California Physical Premium Audits Increasing For Certain Classifications

2013-04-22T18:48:00.000-04:00

The WCIRB (California's Rating Bureau) recently released a reminder memo on the upcoming changes for 2014 Workers policies that have payroll developed under what is called a High Wage/Dual Wage Classification.

Physical audits will be required for all new policies regardless of the amount unless it is a renewal policy that has been physically audited in the past two years.

According to the WCIRB -

Currently, the USRP at Part 3, Standard Classification System, Section VI, Administration of Classification System, Rule 4(a)(2) states: "Each policy producing a final premium of less than $10,000 shall be physically audited at sufficient intervals to ensure determination of proper payrolls." The Insurance Commissioner's Decision adds a new audit requirement for policies effective on or after January 1, 2014.

The new audit requirement provides that each policy producing a final premium of less than $10,000 and developing exposure in a high wage, dual wage construction classification must be physically audited unless the policy is a renewal and the insurer physically audited one of the two immediately preceding policy periods. This new audit requirement also applies to policies issued to Owner Controlled Insurance Programs (also known as "wrap up" policies).

This means that new small policies will be physically audited even if they are under $10,000. The recordkeeping requirements for physical audits are:

"An audit of payroll, whether conducted at the policyholder's location or at a remote site, that is based upon an auditor's examination of the policyholder's books of accounts and original payroll records (in either electronic or hard copy form) as necessary to determine and verify the exposure amounts by classification."

The bottom line is that if you have a small construction company with premiums less than $10,000 it is wise to make sure you have all payroll figures correctly recorded. The old rule was that if your policy was under $10,000 your company may have not been required to go through physical audits. This will cause a large number of physical premium audits for policies that have less than $10,000 in premiums.

The list of high wage/dual wage classifications is available here.

Extremely High E-Mod Question And Ten Ways to Fix

2013-04-18T12:40:00.000-04:00

I received this question from a blog reader last week. Our E-Mod has been running over 1.4 since our company has been in existence. It is now in excess of 1.7. We are in our state's assigned risk pool. The rates seem extremely high. What strategies would you suggest to decrease the Mod very quickly?

One of the quickest ways to reduce your E-Mod is by instituting or improving your safety programs. The claim that never happens will always be the best way to lower your E-Mod. With an E-Mod of 1.7, your company likely had repetitive injuries and not just a few high-dollar injuries.

As you are in a NCCI rated state, your company also likely experienced an E-Mod increase due to the E-Mod calculation changes.

The other techniques to reduce your E-Mod would be:

Working with your carrier more closely - especially your claims adjuster. The adjuster that sets the reserves usually knows whether your company is using some of the following techniques. This can make a difference in your reserves.
First Reports of Injury must be immediately filed with the carrier
You must have a medical network 24/7/365 available for treatment. Many industrial-minded clinics operate in your area.
You must have - and it looks like your company does not - a return to work program. Assessing your company's limited duty jobs and having those on file with the aforementioned medical network will reduce your Mod.
The way the employee is treated by your HR staff is important. The injured employee is still your employee. Treating them as such will help in all aspects of the WC claims.
Get a copy of your loss run and analyze it very heavily. The loss runs are basically a map of how your company came to have a higher Mod. Do all of the figures look correct on your loss run?
Online access to loss runs is priceless as you do not have to wait weeks before receiving one which is then dated by the time your receive the paper loss run.
If your company is large enough, a plant nurse is one of the best ways to handle the smaller claims more efficiently and to cut the costs of larger claims. In case of a very serious accident, the plant nurse can be a literal life-saver. Almost all companies that have plant nurses have been very happy with their claims improvement.
Alternative Workers Comp coverage may also be a solution. PEO's, captives, self-insured groups are all possibilities The one caveat here is choosing the CORRECT alternative for your situation and the right company. Alternative WC coverage can be full of some unscrupulous companies.

This list of quick-fixes is not actually going to be fully seen until three or four years in the future. Workers Comp is a lagging-time system. A bad claims year or a set of great improvements may not show fully in your E-Mod for quite some time. Vigilance is also a key characteristic to companies that improve a bad Mod.

North Carolina Industrial Commission - Employer Coverage Search Returns (Finally)

2013-04-17T09:31:00.000-04:00

The North Carolina Industrial Commission has returned to allowing web searches for employers' Workers Compensation coverage. The website was removed after some very not-so-intelligent legislation that barred anyone from viewing this info.

The ill-timed legislation was enacted following the discovery by a newspaper reporter that 30,000 + companies were operating without Workers Compensation coverage in North Carolina. One has to wonder how many companies are still operating without coverage in North Carolina.

NC's Governor Pat McCrory decided to create another governmental group - the GBICC - to assure the flow of info between the Industrial Commission, Department of Insurance, NC Rating Bureau, and other departments that are considered critical in the information flow on WC policyholders. Somehow, this all looks to be very complicated compared to other states WC enforcement such as West Virginia.

I actually never understood why the website was taken down. Some of this information could have been shared and still have complied with the privacy laws.

The website seems to be working just fine. The website may be good for verifying coverage for subcontractors if your company wants to check to make sure the certificate of insurance is valid.

Overall, allowing online searches of Workers Comp data will aid in making sure that employers are not operating without coverage. I hope more companies and individuals will use the website.

THE 83rd ANNUAL NC STATEWIDE SAFETY CONFERENCE - May 14th - 16th

2013-04-16T01:07:00.000-04:00

The following is all of the sessions for the Conference. As mentioned before, the conference is free, except for certain meetings.

THE 83rd ANNUAL NC STATEWIDE SAFETY CONFERENCE

Joseph S. Koury Convention Center

Greensboro NC

MAY 14 - 16, 2013

“In Memory of James Alvin Scott”

August 13, 1943 – December 26, 2012

PROGRAM

TUESDAY SESSIONS – May 14, 2013 “CERTIFICATION DAY”

CONFERENCE REGISTRATION - 8:00 am - 5:00 pm – Heritage Room - 3^rd Floor Atrium

EXHIBIT HALL CLOSED during Exhibitor Set-up - 4:00 pm - 9:00 pm

NCALGESO WORKSHOP – 8:45 am - 11:45 am – VICTORIA BALLROOM

Moderator: Miriam Powell, President, NCALGESO, Newton, NC

8:45 - 9:00 “Welcome and Announcements”

Speaker: Miriam Powell, President, NCALGESO Risk Manager, Catawba County Government, Newton, NC

9:00 - 10:00 “What is a Safety Role Model?”

Speaker: Bill Harris, Safety Manager Lorillard & Triad Chapter ASSE Greensboro, NC

10:00 - 10:45 “A Safety & Wellness Toolbox to Improve Participation and Commitment”

Speaker: Mark Holzer, Safety & Risk Manager Rockingham County

10:45 – 11:00 “Break”

11:00 – 12:00 “Advances in Soft Tissue Injury Prevention”

Speaker: Bryan Fass, ATC,LAT,CSCS, EMT-P President, Fass Consulting, LLC, Charlotte, NC

WATER/WASTEWATER OPERATORS WORKSHOP - CLOSED SESSION - Pre Registration Required! Also Approved for Well Drillers CE Hours!

($34.95 per person) - 8:00 am - 4:00 pm – BLUE ASHE (6 hours Professional Growth – Pre-registration REQUIRED)

To Register, CLICK HERE

Moderators: Stephanie Glasgow, OWASA, Carrboro, NC

David Vann, Coty, Sanford, NC

Speakers: NC Safety Conference, Inc. Safety Consultants

OCCUPATIONAL SAFETY & HEALTH WORKSHOP - 1:00 pm - 4:00 pm VICTORIA BALLROOM

Co-sponsors: North Carolina Department of Labor; Eastern Carolina, North Carolina, Tar Heel, Triad & Western Carolina ASSE Chapters

Exhibitors: Mark Jackson, ASSE

Dennis Parnell, NC Safety Conference, Inc.

Tom Wilder, NC Department of Labor

Wendy Laing, NCSU/IES

Moderator: Tom Wilder, MESH, C-MESH, Safety Education Specialist, NC Department of Labor, Raleigh, NC

1:00 – 1:50 “OSH Update”

Speaker: Allen McNeely, OSH Director, NC Department of Labor/OSH Division, Raleigh, NC2:00 – 2:30 “Recognition Program Update”

Speaker: Lamont Smith, Recognition Program Manager, MS, CPM, NC Dept of Labor/OSH Division, Raleigh, NC

2:30 – 2:45 “Break”

2:45 – 3:15 “Standards Update”

Speaker: Kevin O’Barr, Standards Supervisor, MESH, CPM, NC Dept of Labor/OSH Division, Raleigh, NC

3:15 – 4:00 “Conference Welcome and Announcement of 2014 Conference Dates”

Speaker: Dennis E. Parnell, Executive Director, NC Safety Conference, Roanoke Rapids, NC

WEDNESDAY, May 15, 2013

CONFERENCE REGISTRATION - 8:00 am - 4:30 pm – Heritage Room - 3^rd Floor Atrium

EXHIBIT HALL OPEN - 8:00 am - 4:30 pm - 3^rd Floor Atrium

GENERAL SESSIONS

EARLY BIRD SESSION - 8:00 am- 8:30 am- VICTORIA BALLROOM

Moderator: Dennis E. Parnell, Executive Director, NC Safety Conference, Inc. Roanoke Rapids, NC

8:00 - 8:30 “Dealing in a World of Conflict”

Speaker: Buck Lattimore, Director of Legislative Affairs & Insurance Regulations, NC Chiropractic Association, Raleigh, NC

8:30 – 8:45 Break

WORKERS' COMPENSATION SESSION 8:45 am – 9:15 am – VICTORIA BALLROOM

Moderator: Dennis E. Parnell, Director Safety Education, NC Industrial Commission, Raleigh, NC

Sponsored by Carolina Back Institute - Kelly Lewis, Marketing Director

8:45 – 10:00 “What if Everything You Knew….?”

Speaker: Dr. Joe Siragusa, Executive Director, NC Chiropractic Association, Raleigh, NC

10:00 -10:15 Break

10:15-10:30 “NC Industrial Commission Safety Section Update”

Speaker: Dennis Parnell, Safety Director, NC Industrial Commission, Raleigh, NC

10:30 – 12:00 NC STATEWIDE SAFETY TALK CONTEST AND AWARDS

Moderator: Charles R. “Buster” Dawson, Board Chairman, NC Safety Conference, Inc., Wilson, NC

NC Statewide Safety Talk Competition – Regional Safety Contest Winners, AWARDS AND DOOR PRIZES

12:00 - 1:30 Visit the Exhibits

ASSE LUNCHEON - 12:00 pm - 1:30 pm – COLONY BC

Moderator: Jeffrey Bruening, Delegate, Tarheel Chapter ASSE

Luncheon Tickets Required - Tickets available at ASSE Booth # 2 in the Exhibit Hall or from your local ASSE Chapter President

INDUSTRIAL SESSIONS - 1:30 pm to 4:00 pm

(1) PINEHURST

Moderator: Michael Nance, Safety Consultant, NC Safety Conference, Inc. Belmont, NC

Andy Spradley, Safety Manager for Biltmore Company, Asheville, NC

1:30 - 2:15 PESTICIDE APPLICATORS CONTINUING CERTIFICATION CREDIT - (1 Hour Credit for Subclasses L, D, N, O, X)

“Pesticide Safety Update”

Speaker: Wick Wickliffe, NC Cooperative Extension Guilford Center, Greensboro, NC

2:15 - 3:15 Visit the Exhibits

3:15 - 4:00 “Safety in the Hospitality Industry”

Speaker: Andy Spradley, Safety Manager for Biltmore Company, Asheville, NC

(2) SANDPIPER

Moderator: Peggy Reynolds, Tyson Foods, Inc., Wilkesboro, NC

1:30 - 2:15 “The Digital Job Analysis”

Speaker: Shelley Jones, MS, CRC, Carolina Case Management, Raleigh, NC

2:15 - 3:15 Visit the Exhibits

3:15 - 4:00 “Who You Leave Behind When Killed on the Job”

Speaker: Michael Bearak, CSHM, MESH, CSMP, C-MESH - Independent Consultant, Rock Hill, SC

(3) AUGUSTA A

Moderator: Buford Ellis, Corporate Account Manger, CA Short, Shelby, NC

1:30 - 2:15 “Safety Incentives & OSHA – For or Against?”

Speaker: Jim Barr, VP of Sales, C.A. Short Company, Shelby, NC

2:15 - 3:15 Visit the Exhibits

3:15 - 4:00 “Safety Incentives & OSHA –For or Against?”

Speaker: Jim Barr, VP of Sales, C.A. Short Company, Shelby, NC

(4) AUGUSTA B

Moderator: Mel Harmon, Safety Consultant, NC Safety Conference, Inc. Sanford, NC

1:30 - 2:15 “Arc Flash Awareness/Loss Prevention Overview”

Speaker: Scott King, Senior Project Manager, Hallam-ICS, Raleigh, NC

2:15 - 3:15 Visit the Exhibits

3:15 - 4:00 “21^st Century Safety Committees”

Speaker: Mel Harmon, Safety Consultant, NC Safety Conference, Inc. Sanford, NC

(5) COLONY A

Sponsored by NC Trucking Association, Safety Management Council

Moderators: Rick Cates, NC Trucking Association, Raleigh, NC

Bill Seitz, Hickory, NC

Tim Long, Epes Carriers, Greensboro, NC

1:30 - 2:15 “Safety Considerations in the DOT Medical Exam ”

Speaker: Dr. Albert James Osbahr III, Medical Director for Occupational Health Services, Catawba Valley Medical Center, Hickory NC

2:15 - 3:15 Visit the Exhibits

3:15 – 4:00 “Safety Considerations in the DOT Medical Exam ”

Speaker: Dr. Albert James Osbahr III, Medical Director for Occupational Health Services, Catawba Valley Medical Center, Hickory NC

EXHIBIT HALL CLOSES – 4:30 pm

CONFERENCE - EXHIBITOR RECEPTION - 5:00 pm - 7:00 pm – VICTORIA BALLROOM – Sponsored by Your Exhibitors!

The reception is open to all participants. Please join us for socializing with music and entertainment provided by Tom White, Classic Sound Entertainment, Lucama, NC. Mr. Jerry Frazee and his associate will be on hand again this year in the Exhibit Hall providing FREE caricature drawings10:00 am – 4:00 pm!

THURSDAY, May 16, 2013

CONFERENCE REGISTRATION - 8:00 am - 4:00 pm - 3^rd Floor Atrium

EXHIBIT HALL OPEN - 8:00 am - 3:30 pm - 3^rd Floor Atrium

GENERAL SESSIONS

EARLY BIRD SESSION - 8:00 am- 8:45 am- VICTORIA BALLROOM

8:00 - 8:45 “Identifying Your Monsters”

Speaker: Kevin Cobb, Senior Safety Consultant, SafeStart, Ontario, Canada

8:45 - 9:15 “Break”

EXECUTIVE MANAGEMENT SESSION - 9:15 am - 12:00 pm – VICTORIA BALLROOM

Sponsored by Sensors Safety Products, Jody Fountain, President

Moderator: Fletcher Bizzell, Glenoit LLC/Ex-Cell Home Fashions, Inc., Goldsboro, NC

9:15 - 10:00 “Quit Feeding the Monsters: Creating a Positive Safety Culture”

Speaker: Kevin Cobb, Senior Safety Consultant, SafeStart, Ontario, Canada

10:00 - 10:30 “Break”

10:30 - 11:55 “Slaying the Monsters through Better Observations”

Speaker: Kevin Cobb, Senior Safety Consultant, SafeStart, Ontario, Canada

11:55 - 12:00 “NC Safety Conference, Inc. Update”

Speaker: Dennis E. Parnell, Executive Director NC Safety Conference, Inc. Roanoke Rapids, NC

12:00 - 1:30 Visit the Exhibits

OCCUPATIONAL HEALTH NURSES ASSOCIATION LUNCHEON - REGISTRATION BEGINS AT 11:30 a.m.

12:00 – 12:45 – GRANDOVER WEST – CLOSED SESSION – Pre-registration Required!!!

Moderator: Cara Winstead, RN, MPH, COHN-S, Education Director, NCAOHN, Cary, NC

Luncheon tickets available from NCOHN Association by Pre-Registration ONLY. For more information call Cara Winstead at (919) 362-1431 or emailcbwinstead@nc.rr.com

INDUSTRIAL SESSIONS - 1:30 pm to 4:00 pm

(6) OCCUPATIONAL HEALTH NURSES SECTION – GRANDOVER WEST – CLOSED SESSION – Pre-registration Required!

Sponsored by the NC Association of Occupational Health Nurses

Moderator: Cara Winstead, RN, MPH, COHN-S, Education Director, NCAOHN, Cary, NC

1:00 – 1:45 “Work Conditioning: Putting the Work into Rehabilitation”

Speaker: Debra Lord, Vice President, Job Ready Services, LLC, Cary, NC

1:45 - 2:00 “Break”

2:00 - 3:00 “Work Conditioning: Putting the Work into Rehabilitation’

Speaker: Debra Lord, Vice President, Job Ready Services, LLC, Cary, NC

7) COLONY BC

Moderator: Charles R. “Buster” Dawson, Dawson Construction Services Inc., Wilson, NC, Wendy Shepherd, Occupational Safety, NC State University Environmental Health and Safety, Raleigh, NC, Bill Walker, MSOS, CPEA, CRM, Director of Risk Management, Southern Piping Company, Wilson, NC

1:30 - 2:15 “Today’s Ergonomic Systems”

Speaker: Jennifer Law, Workforce Strategies /Marsh Risk Consulting, Associate Vice President, Charlotte, NC

2:15 - 2:30 Visit the Exhibits

2:30 - 3:15 “Health and Safety Hazards Associated with Electronic Recycling”

Speaker: Kim Morton, Area Director, Federal OSHA, Raleigh, NC

8) TIDEWATER

Moderators: Richard Collier, Louisiana Pacific Corp, Roaring River, NC

Randy Green, Georgia Pacific, Dudley, NC

John Lemire, Forestry Mutual Insurance Company, Raleigh, NC

1:30 - 2:15 “Lockout/Tagout – Performing a Risk Assessment for Alternative Methods”

Speaker: W. Jon Wallace, Safety Consultant, CSP, MBA, Workplace Group LLC, Chapel Hill, NC

2:15 - 2:30 Visit the Exhibits

2:30 - 3:15 “Safety in a Changing Workplace”

Speaker: Glen Carter, Chief Technical Officer, Justrite Manufacturing Company LLC, Mattoon, IL

(9) TANGLEWOOD

Moderators: Mark Hutchings, Safety Coordinator, Kapstone Paper, Roanoke Rapids, NC

1:30 - 2:15 “Safety at Highway Crossings and Danger of Being on Railroad Property”

Speaker: Nelson High, NCDOT Engineering and Safety Consultant, NCDOT Be Rail Safe, Littleton, NC

2:15 - 2:30 Visit the Exhibits

2:30 - 3:15 “What you Don’t Know Can Hurt You – Literacy in the Workplace”

Speakers: Susan Quigley, Safety Specialist, Unilin Flooring, Thomasville, NC

(10) SANDPIPER

Moderator: Frank Merrell, Program Head, Rowan-Cabarrus Community College, Salisbury, NC

Ken Blake, Career Management Consultant, Staffing Force, Greensboro, NC

1:30 - 2:15 “Dealing with the Aftermath of the Event”

Speaker: Dr. Joe Woodall, Program Chair, Fire Protection Technology, Rowan-Cabarrus Community College, Salisbury, NC

2:15 - 2:30 Visit the Exhibits

2:30 - 3:15 “Dealing with the Aftermath of the Event”

Speaker: Dr. Joe Woodall, Program Chair, Fire Protection Technology, Rowan-Cabarrus Community College, Salisbury, NC

(11) AUGUSTA B

Moderators: Geri Brown, Charlotte-Mecklenburg Utilities, Charlotte, NC

Dave Holloway, Public Works Commission, Fayetteville, NC

Fred Allen, City of Greensboro, Safety Officer, Greensboro, NC

Matthew Schweitzer CIH, CSP, Safety Manager, City of Greensboro, Greensboro, NC

Denise Kennedy, Piedmont Natural Gas, Charlotte, NC

1:30 - 2:15 “Meth Lab Identification”

Speaker: Agent Scott Jones, Supervisor for Interstate Criminal Enforcement, 21^st Judicial Drug Task Force, Fairview, TN

2:15 - 2:30 Visit the Exhibits

2:30 - 3:15 “Meth Lab Identification”

Speaker: Agent Scott Jones, Supervisor for Interstate Criminal Enforcement, 21^stJudicial Drug Task Force, Fairview, TN

EXHIBIT HALL CLOSES - 3:00 pm Exhibitor Door Prize and Grand Prize Drawings will be held in the Exhibit Hall at 3:30 pm. You must be present to win Grand Prize Drawing.

4:00 pm “Closing Comments” Dennis E. Parnell, Executive Director, NC Safety Conference, Inc.

Premium Audit Result Is The Final Workers Comp Policy Bill

2013-04-11T11:39:00.000-04:00

I received a question late last night on the last article I wrote on Deposit Premium. The question - (paraphrased) was:

We paid a very large deposit premium upfront January 2012. We have not heard from the insurance carrier except to renew our current policy for 2013. Should we be expecting a call or letter from our carrier's premium auditor? Was the deposit premium for 2012 adequate? Should we be doing something on our end?

If your company has paid all premiums requested by your carrier, then you have not really done anything that would violate your 2012 or 2013 policy. April is a little late for a policy that expired in December 2012. Your final policy premium should never be considered as the deposit premium with your new policy.

Most states do have some type of rules on when policies can be audited by the carrier. If you look in your policy, in usually the last few pages, you will find your carrier's premium audit rules. Most of the time it will have a passage or two on your responsibilities for your final premium audit.

You may want to check your incoming letters. We have seen a very large carrier in the mid-Atlantic states send out a large amount of marketing materials - sometimes two or three times a month. A letter with a follow up letter was sent out by the carrier from the audit department. The client employer actually thought it was marketing material and threw them out each time.

Their first notice was a 10 day notice to cancel their current policy for not abiding by the premium audit rules for the prior policy. With our assistance, the situation was straightened out in the nick of time and coverage cancellation was avoided.

A good suggestion is to have someone responsible for any (not just Workers Comp) insurance mail. Do not assume that your agent is receiving carbon copies of all of the mail from your carrier. The designated person should bring any of these items to the attention of management:

Endorsements
Changes to premiums
Bills
Policies
Notices
Audit results
Audit bills

If you feel your company may be owed a refund, then you may want to reach out to the carrier. As post-audit policy refunds are becoming more rare, that is a decision you may want to weigh heavily. All Workers Comp policies require responses, not initial contact.

Workers Compensation Deposit Premium Has Very Little To Do With The Final Bill

2013-04-10T13:44:00.000-04:00

We are starting to notice a trend between your company's initial deposit premium and the final premium audit bill. The deposit premium is just that - a deposit to bind coverage. We hear from many company owners and risk managers that what they expected to pay for the year is quite different - causing a budget shortfall.

There are many reasons for the final premium not being what your company has expected to pay for Workers Comp coverage for the policy year. Some of the reasons are:

Congratulations - your company has grown which in turn is going to increase your premium proportionally. When you signed on with a carrier, you may not have expected such growth, which actually increases all variable expenses.

Take the Mod into account - your E-Mod or X-Mod may have been higher than you expected overall. If your company grew, the Mod is not going to decrease substantially.

Along with the previous bullet point, you may have had a bad claims year up to four years ago. This is going to cause your company to pay more than expected if the company grows quickly.

Your business is reclassified - there may have been changes to your business operations. There is a caveat with this one. There are very specific rules on how your business may be reclassified during the policy period.

Your safety program needs improvement. This would be the most popular problem with sharply increasing premiums. NCCI has added in a new penalty of sort if you have repetitive accidents. All the other rating bureaus have a built-in penalty if you have multiple accidents regardless of the size of the claims.

Your company may start operating in multi-state jurisdictions or operate near a navigable waterway. These two situations can cause a large jump in final premium.

"The good quote" by the agent is just a quote - not what you are going to pay after the premium auditor is finished after policy expiry.

Another caveat (I use that word often), is to never start a dispute unless you know the basis for why you are disputing your final bill. Exclaiming that you just feel that your company paid too much often ends up with your company having an even larger premium bill. I have a file on my desk right now that is proof positive of this situation.

When Articles Hide The Real Study Results

2013-04-08T23:07:00.002-04:00

Workers Compensation statistics can be used to make an invalid point by massaging the data to make sure the data fits the assertion. Overall, misleading statistics are becoming more popular. Writing an article that does not actually agree with the study takes being misleading to a whole new level.

One of the more recent articles that over-embellishes the study results is between cancer and red meat consumption. In fact, there were many articles that left out the fact that there was an association between red meat and early death. An association is not the same as conclusive evidence or a correlation.

The Guardian newspaper out of the United Kingdom actually included the whole article. One of the most stark statements in the complete article on the study is:

This US study looked at associations between high intakes of red meat and risk of mortality, finding a positive association between the two. However, the study was observational, not controlled, and so cannot be used to determine cause and effect.

The Guardian article was actually a correction of an even more boastful but untrue statement. The original stated that an extra serving of red meat raised mortality rate by a fifth without specifying frequency of consumption.

The study should have made a correlation, not an association. Correlations are much more accurate than an association. In other words, there s really no direct correlation between eating red meat and cancer. Most often, a correlation between two variables of more than 80% is seen as being a strong correlation.

The bottom line is there may be a correlation between red meat and stomach cancer, but this study does not address the matter with validity.

California WCRI SB 863 Baseline Study Shows Mixed Results

2013-04-04T13:00:00.000-04:00

The Workers Compensation Research Institute (WCRI) recently published its Baseline For Monitoring the Impact of 2012 Reforms in California" Compscope(tm) Medical Benchmarks, 13th Edition. The report can be found here on their website.

The study is very thorough in its intent. The final results due to the X-Mod system will be fully available in 2017. However, a baseline (and that is what the report does overall) needs to be established for future comparisons. The baseline is critical for future comparisons back to SB 863's initiation.

Some of the highlights from the intensive study are:

The medical payment amounts were not out of line with the other states in the study. This is somewhat unexpected as the WC airwaves always had California as being the most expensive medical state.
The price pressures for medical payment reductions were offset by a high level of utilization. This conundrum has been seen nationwide where major cost reductions were enacted in new WC legislation.
Physical medicine utilization had increased at a steady rate since 2005. This included chiropractors and physical therapists.
Major radiological studies were performed for non-back issues at a higher rate.
Complex office visits became more common. The transition to a new fee schedule will likely increase the rates for office visits.

The most telling of the summary statistics for CA was in the area of medical-legal expenses. According to the study, at an astounding $2,600 per case, CA was 80% higher than the median of all the states in the study. Can California's Work Comp system actually sustain this per-file level?

The medical-legal expenses were still growing at a rate of approximately 8.5% per year. This was likely due to the 2004 reforms requiring mandatory utilization review and Medical Provider Networks (MPN's).

However, MPN's in other states have usually created a decrease in medical spending levels. One can look at look at Tennessee's reforms as a great example. The utilization review rules may be the culprit when combined with the requirements of the MPN's.

SB 863 is going to supposedly fix this situation. The full effect and enforcement of SB 863 will produce partial effects in 2014, 2015, and 2016. WCRI will likely produce more studies as these matters develop over time.

*Thanks to Andrew Kenneally, Communications Director at WCRI for his assistance.

Upcoming Presentation on NCCI or NC Rate Bureau Changes

2013-04-04T02:57:00.000-04:00

I will be presenting on the new NCCI or NC Rate Bureau Mod Calculation changes later this month at Job Ready Services in Raleigh. You can register here

April Lunch & Learn:

Wednesday, April 24, 2013

12:00pm-1:00pm

Topic: E-Mod Rate Changes: How to Reduce Worker's Comp Premiums

Speaker: James Moore, JL Risk Management Consultants, Inc.

Cost: $10.00

With the new NCCI and the North Carolina Rating Bureau E-Mod changes effective 4/1/13 in North Carolina, smaller claims are now more expensive than ever. The rules have changed dramatically on how each employer is charged for their Workers Compensation claims. Large deductible or self-insured employers will also feel the effects of these changes.

A brief overview of the new changes will be covered along with post -accident Risk Management techniques. The methods for lessening the effect of these changes will be covered along with other services such as rehabilitation nurses’ involvement, employer guidelines, and work conditioning/industrial rehab services.

How Is It Calculated - The Most Basic Mod Formula

2013-04-02T22:20:00.001-04:00

We receive a large number of calls and emailed questions on how Mods (E-Mods or X-Mods) are promulgated by NCCI, WCRB, or State Rating Bureau. One of the most common scenarios is when an employer's Mod increases over 1.0.

A very large number of contractors now require a 1.0 Mod or less for their subcontracting companies. Mods at the 1.0 level are now more difficult to attain due to the recent NCCI changes on Mod calculations. A more accurate statement is that an employer with a Mod of 1.2 or above will find an increasing difficulty in lowering their Mod back to 1.0.

I had hoped the contractors would increase the acceptable subcontractor Mod to 1.1 due to the changes in the E-Mod calculations. This has not been the case whatsoever. One contractor had told me that "an unsafe company is still an unsafe company."

The basic inputs into the Mod are:

Payroll
Classification Codes
Claims Total Incurred (Paid + Reserves)

The Mod formula measures:

Actual Losses / Expected Losses

The Expected Losses originate from the first two bullet points.   In other words, what claims are expected for the level of payroll of each classification code?   The Actual Loss figure is the Total Incurred for a given year.

As the level of payroll increases, the level of Expected Losses will increase overall. Increased losses are more likely with a higher number of employees or work-hours. If the Actual Losses (Claims) do not increase, then the Mod will decrease in most cases.

There is actually a large amount of "number voodoo"required to calculate the Actual and Expected Losses.

Workers Comp Program At The Bankrupt City of Stockton California

2013-04-01T23:23:00.002-04:00

The largest bankrupt city in the nation - Stockton, CA is self insured with CorVel as the Third Party Administrator (TPA). Stockton's Workers Comp program seems to still be a fully funded self insured program.

One of the Five Keys To Saving Workers Comp $$ was being implemented at the time of the bankruptcy filing. Stockton had initiated a medical treatment provider network (MPN) to cut medical treatment costs. The MPN was very likely part of the CorCare network.

Stockton's Risk Services department requires that all employees initially treat with one of three medical clinics. This is a very conservative cost saving approach to reducing Workers Comp medical costs. The MPN will also enable Stockton and CorVel to better administer their return to work program.

The one area of concern on Stockton's Workers Comp program is the benefit integration program. Workers Comp is meant to be a standalone program. That is why 2/3 of an injured employee's wage is paid to them TAX FREE. Basically, the employee is being paid full wages as there is no tax on the Workers Comp benefits.

Stockton is now using the employee's leave time to integrate with Workers Comp payments to make sure they are being paid FULL SALARY. Actually, Stockton is paying their injured employees that are out of work approximately 125% of their pre-injury wage. This overpayment will remove any of the built-in motivations to return to work.

Workers Comp laws, rules, benefits, etc. were put in place to make the injured employee be as whole as possible while recovering from their injuries. Stockton needs every dime they can find right now as they are out of $$$. The benefit integration program is a mistake that will cancel out any of the savings from the MPN they wisely put in place.

Will Workers Comp Funds Recovered Lower Our Mod?

2013-03-27T22:27:00.001-04:00

This question was emailed in from a blog reader from Virginia. The rest of the employer's question pointed out that the file was six years old. The answer to the question is it depends on the timing of the recovery.

Virginia, as in most states does not allow a Mod (Experience Modification Factor) revision from more than four policy years into the past. As the Workers Comp file was more than four years old, the subrogation money will be credited to the file. However, a Mod from six years ago cannot be promulgated again.

The funds are known as "in the money" for the Workers Comp carrier. Strangely enough, the money is in a way pure profit for the carrier.

Self insureds are another matter. The money should be immediately returned to the employer as the Third Party Administrator (TPA) had paid the claim from an account, not an insurance policy.

The funds that were recovered due to subrogation cannot be applied to the Mod after four policy years maximum. This is due to the way that Mods are calculated by NCCI or the State Rating Bureau.

In almost all cases, the Mods are promulgated from policies four, three, and two years prior to the current policy year. The Workers Comp claims from the policy that expired in the previous year will not be charged to the Mod until the following year.

Over the past few years, there have been a number of lawsuits pursuing the Mod recalculations even though they were from files that were older than four years. The lawsuits are/were alleging the carriers were too slow in recovering and applying the funds which caused higher Mods.

This situation is exactly why the employers should be very vigilant in tracking subrogation or any type of file refund such as an overpaid medical bill. It is not recommended that your company leave it to the carrier to recover and apply the recoveries or refunds to the Mod.