NJASBO 2015 Annual Conference Wednesday, June 3rd Workers Compensation A Claim from Start to Finish Key Elements







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NJASBO 2015 Annual Conference

Wednesday, June 3rd

Workers’ Compensation

A Claim from Start to Finish

Key Elements

Studio 1, 9:00 a.m. to 10:15 a.m. - Clinic #3 Studio 1, 10:30 a.m. to 11:45 a.m. - Clinic #7


Session Speakers

Craig H. Wilkie, RSBA

– Area Vice President, Arthur J. Gallagher & Co.

– Executive Director SPELL JIF

– Recently Retired School Business Administrator

Slide 2

Scott C. Tennant

– Area Vice President, Arthur J. Gallagher & Co.


Session Goals

Understand what workers’ compensation is

Understand who the parties to the process are

and what role they play

Know what drives cost in the system

Know the District’s role in the process

Be a positive advocate

Be ready for the challenges


What Is Workers’ Compensation?


Workers’ Compensation Is:

Social legislation (N.J.S.A. 34:15-7, et seq.) intended

to guarantee injured worker’s specific benefits due to

a work related injury as a trade-off against a worker’s

right to sue their employer due to a work related injury

The administration of the system is through the New

Jersey Department of Labor, Division of Workers’

Compensation who has “the exclusive original

jurisdiction of all claims for workers’ compensation


When a claim petition (litigation) is filed the matter is

adjudicated through an administrative court and these

claims are not civil court actions


Workers’ Compensation Benefits:

The statute provides three distinct benefits:

a. Medical Benefits (medical paid to plateau)

b. Temporary Disability Benefits (lost wages)

c. Permanent Disability Benefits (financial awards)

Worker rights to benefits are rarely affected by their own


Workers’ compensation benefits can continue past

employment and for life


Workers’ Compensation Responds To:

Accidents arising out of and in the course of

employment. The burden of proof that an accident

did not occur rests with the employer

Occupational disease if it is proved the disease is

characteristic of or peculiar to the work in a material

degree. The burden of proof that the workplace gave

rise to the disease rests with the employee


The workers’ compensation law

Disability (Lost Wage) Payments

Workers’ Compensation Law  An employee has to be disabled

more than seven days before temporary disability benefits shall accrue.

 They don’t have to be consecutive days.

 The benefit applies retroactive to the first day.

 The benefit changes every year based upon the Statewide Average Weekly Wage calculation and has a weekly maximum and minimum amount. The amounts are $826 and $220 for 2014 and will be $855 and $223, respectively.

Slide 8

Other Laws Affecting Disability Payments

N.J.S.A. 18A:30-2.1 provides that school district employees are entitled to full salary for up to one year following the date of injury for absences due to a workers’ compensation injury.

 IRS Regulation Section 31.3121(a)(2)-1 states that wages do not include the amount of any payment made under workers’ compensation laws. The NJ Division of Pensions has

interpreted this to mean that no federal, state or FICA taxes may be withheld.

 N.J.S.A. 43:15A-25.1 If a member of the retirement system receives periodic benefits payable under the Workers’ Compensation Law during the course of his active service, in lieu of his normal compensation, his regular salary deductions shall be paid to the


System Organization and How It Works

Injured Employee Employer Claim Administrator Managed Care Nurse Physician Communicate Attorney Slide 9


What Is The Process?

Injured Employee

- promptly report injury

- provide a complete description of the accident

- get better


- create internal reporting policy and procedure - ensure its enforcement and communication - monitor all accident activity

- investigate accidents

- communicate with all players

Claim Administrator

- set up claim file

- determine compensability within the statute - monitor activity for breaches of the statute - pay claims as appropriate

- manage file through litigation and closure - communicate with all players

Managed Care Nurse

- monitor medical progress - speed up medical processes

- work to get injured employee back to full health as soon as possible

- communicate with all players


- see injured employee promptly

- determine if injury could have happened as described - prescribe treatment

- monitor patient progress - communicate with all players - make return to work decisions!


- manage the litigation process - keep the employer, claim

administrator and involved physicians up to date - resolve the litigation


Cost Drivers

Know what drives costs up

Untimely reporting

Out of network doctors and personal


Disability resulting in people out of work



Untimely Reporting

“Workplace injuries reported within ten (10) days of their occurrence cost an average of $10,172, while ones reported after thirty (30) days average $15,745, Kemper National Insurance Companies finds.

Early reporting leads to quicker treatment, while delay lets

problems fester and increases chances of litigation, says




Time is money...


Untimely Reporting

“The prompt reporting of claims is one of the easiest ways to lower your total cost of risk; the sooner we learn about the claim the quicker we can engage in medical and disability


Using the 0-3 day period as the baseline, the cost of a late reported claim is

9% more if reported between 4-7 days, 20% more if reported between 1-2 weeks, 32% more if reported between 4-8 weeks, and 72% more if reported at one month or later.”

The Cost of Late Claim Reporting Liberty Mutual Group


Time is money...


Cost Drivers

Out of network doctors and personal physicians

 Usual and Customary pricing is much higher than in network pricing

Currently, between 50 to 70 percent of medical provider charges that are out-of-network are being paid at full price, Gaughan said.

How to Reduce Out of Network Medical Billing Costs By Denise Johnson | November 27, 2012


 Personal Physicians are:

– Rarely trained to manage workers’ compensation claims

– Far more likely to extend time off to a patient with whom they have an established medical relationship and whom may be only one of many family members the Physician treats


Cost Drivers

Disability Costs

Direct Costs

– Medical Expenses – Lost Wages – Permanency Awards

Like an iceberg the below view (indirect) costs usually add up to much more than the in view (direct) costs.


$3 - $10

Indirect Costs

– Substitutes and temporary help

– Increased payroll benefit costs

– Replace valuable employees

– Train new employees

– Reduced productivity

– Administrative paperwork

– Associated “other” liability issues

Decline in customer satisfaction

(students, their parents and coworkers)


Cost Drivers

Workers’ Compensation Litigation

Employees who are not satisfied with their treatment

and/or believe they can get more money using an

attorney to represent them, don’t file suits they file


The assumption by the Division and its judges in

these petitions is that an injury has occurred and the

main question isn’t did an injury occur but instead how

much an injured employee deserves in settlement


Cost Drivers

Workers’ Compensation Litigation

No two workers’ compensation judges will rule the

same way given the same set of facts

The law is intended to provide relief to injured

employees and will always give the employee the

benefit of the doubt

It is up to the employer to prove that a set of facts as

provided by an employee are inaccurate

Even when there is evidence that people are

performing tasks while out of work that they have

been restricted from doing while at work due to their

injury will be given the benefit of the doubt by most



Cost Drivers

Weak internal and negative systems

The number one reason for excessive increases in the

cost of workers’ compensation in districts is weak and

negative systems that do not reward desirable

behavior and ignore undesirable behavior. This results

in the appearance and belief that the employer district

allows process abusers to easily abuse the workers’

compensation system and when that happens the

number of abusers increases.


Be Hopeful - Manage the System

If you understand the system and its challenges,

you can manage the system efficiently.


Success depends upon

 Knowledge of the workers’ compensation law

 Knowledge of how the system is organized and works

 Knowledge about how to build a policy and procedure that manages the laws and challenges

 Having a positive workers’ compensation policy and

procedure actively managed that allows employees to feel the district “does the right thing”

 Knowledge of how to handle difficult claim issues

 Knowledge of specific tax law, pension rulings and

employment laws and how each is related to a workers’ compensation claim


The Morality Scale

out of any given 100 employees

 10 of any given 100 employees -

believe it’s immoral to do anything that may hurt their employer

 80 out of any given 100 employees

are undecided about how they might react to a situation and are greatly influenced by the employer’s clear desire

 10 of any given 100 employees have

no moral issue with getting all they possibly can out of every situation


The Morality Scale

Your workers compensation management system will define the balance between moral and amoral behavior providing

guidance to all employees who may some day be involved in a workplace injury


Have a Positive Moral System

That encourages 90 out of any given 100 people to do the right thing

Ten wouldn’t think of doing anything to hurt their employer

Ten do nothing but think of ways to help themselves at their employer’s expense

EIGHTY are trying to figure out what they

should do

The simple truth about any given 100 people is: 90 people will do the right thing,

want the workplace to treat everyone fairly and will support policies and procedures designed to meet a positive objective


Put your philosophy in play.

District Risk Management Program Objectives

Safety and :

Claim Management


Start with Board Policy & Procedure



The ANYTOWN Board of Education recognizes the need to provide a safe working environment for all of its employees. Based upon that need the Board has previously adopted a safety program and has vigorously applied it district wide.

Begin by using the general rubric of safety as the basis for the policy.


It Pays to be Positive About Safety!

Emphasize SAFETY!

Counsel employees on unsafe acts

Form safety committees

Provide safety equipment

Provide safety training

Every claim avoided through safety is

money in the district’s pocket



Policy & Procedure (continued)

The Board also realizes that during the course of normal work activities, an employee may experience an unavoidable accident. Given this, the Board had adopted procedures and policies for handling injuries on the job. Realizing that the adopted

procedures and policies will result in proper handling of employee care and welfare, the Board also realizes that there is a need for a modified duty program to safety return employees to work, who are injured on the job, as soon as possible.

Tie into your district policy and procedure on incident and claim reporting.


Timely Reporting

 To avoid the chaos and extreme expense that results from

claims being untimely reported, adopt a district policy that requires all employees to report all injuries big and small the day they occur

 There is nothing in law preventing an employer from

enforcing a reporting policy and procedure that helps ensure employee safety and health

 Enforce the policy by requiring that all direct supervisors follow up a breach of the policy with the employee and document the breach and discussion to the employee file


Modified Duty

Disability (Lost Wage) Payments

 There is nothing in law that bars a school district from having

a modified duty policy and program

 Without a modified duty policy and program a school district will have to wait until the treating physician declares that the injured worker can return to work without restriction

 A district is in sole control of a modified duty program and can choose to accept the modifications/restrictions and find a role for the employee or choose not to accept the modifications/ restrictions and send the injured employee home to

recuperate. It is not the employees choice unless the district has given the employee that right in a labor contract

 Supervisor buy in on the program is critical


Policy & Procedure (continued)

Any employee who is hurt on the job must follow previously adopted procedures to have the injury properly treated by the

appropriate health care professionals. Once the proper paperwork is filed and the employee has received appropriate treatment, the Board fully expects the Worker’s Compensation doctor to file a report with the Business Office the same day. The Worker’s Compensation doctor will advise as to the nature of the injury, proper treatment of the injury and any restrictions to be placed upon the employee before he/she returns to work

Be certain to tie into the District’s expectations of your appointed physician


Policy & Procedure (continued)

In consultation with the appropriate administrative employee(s) of the district, the doctor will formulate a modified duty plan for the individual employee in question. Any assignment to modified duty will be

appropriate as to the employee’s regular job duties. Upon assignment of the modified duty, and in consultation with the Worker’s

Compensation doctor, the employee will be informed of the duty and when he/she is expected to return to work. If the employee does not return to work at the appropriate time as indicated by the Worker’s Compensation doctor, that employee will be charged for sick time until such time as the employee returns to work.

Your policy must make your workers’ compensation physician a partner in the effort and you have to educate the physician to normal job duties and possible alternative work assignments


Policy & Procedure (continued)

Any employee asked to return to work on modified duty will be given any and all reasonable tools to conduct the duty in a safe manner and to the fullest of his/her ability

Be certain to provide a safe alternative duty

The Board realizes that the employees are most valuable to the district when they are allowed to actively participate in the every day duties of the district. This procedure should result in shorter leaves of absence due to injuries, maximization of an employee’s available skills and a reduction in the use of substitute employees who may not have the same working knowledge of the injured employee

Provide a rational basis for the policy


Policy & Procedure (continued)

It would be appropriate for the Board to

adopt this procedure and implement it

immediately in order to maximize the

effectiveness of the above described


Draft, introduce, amend, adopt and implement


Establish Claim Procedures

 Report claims promptly

 Coordinate all claims reporting

– Require employees to report ALL injuries big and small

– Put one person in charge of the claim reporting system

 Conduct prompt accident investigations

– Gather facts & interview witnesses while memories are fresh – this should be a direct supervisor

– Learn from mistakes and teach others

 Direct medical care

– Select YOUR doctor -- doctor reports to you

» Familiar with Workers Comp issues

» Encourage early return to work

 Establish lines of communication


Contact them immediately

Explain benefits

Stay in touch

“We care and want you back to work

as soon as possible”

Send cards or letters

Go visit them at home

Communicate with Injured Employees

Get Involved - These folks are your coworkers Don’t leave them hanging on a limb


Communicate with the Claim Adjuster

 Provide job description

 Have they accepted compensability?

(Why or why not)

 Are benefits being paid?

 (For how long - To whom)

 What steps are being taken to manage medical?

 Is the employee cooperating?

 Has the employee obtained an attorney?

 Any suggestions for early return to work?

YOU are their customer



 Provide job description

 Information about nature of injury

 Plans for treatment

 Any special instructions for employee

 Is employee cooperating with treatment

 Target date of return to work

 Discussion of employee’s actual duties

 Discussion of potential alternative duty

Get Involved - These folks make the return to work decision

Communicate with Physician/s


 Provide job description

 Information about nature of injury

 Plans to expedite treatment

 Any special instructions for employee?

 Is employee cooperating with treatment?

 Discussion of employee’s actual duties

 Discussion of potential alternative duty

These folks can help compel action within the medical community

Communicate with the Managed Care Nurse


Provide information promptly

Discuss strategy

Help coordinate interrogatories

Help arrange for witnesses to be

present at court

These folks control the defense strategy in all litigated claims

Communicate with Respondent (Defense) Attorney


Be prepared to manage

challenging scenarios


Challenging Scenarios – Whispers of Fraud

 What do you do if a coworker comes

to you and advises they don’t believe the injury of a different coworker

actually happened at work?

 Do you know what tools your claim

administrator has at their discretion to help find out if this is true?

 How would you conduct an internal

investigation to determine what the facts are surrounding the incident?


Challenging Scenarios – Going and Coming Rule

 Is a fall from a big pothole on pavement while walking from where you parked to get to work on campus compensable?

– What if the parking spot is in a school district owned parking lot?

– What if the parking spot is on an adjoining public road not owned by the school district and the pothole is in the street?

– What if the parking spot is on an adjoining public road not owned by the school district and the pothole is in the school districts bus drop off


– What if the parking spot is in a local parking garage not owned by the school district and the pothole is in the street but the school district has leased space in the parking lot specifically for use by employees to park?


Challenging Scenarios

Heart attacks



Aging workforce

Pain Management

Opioid Addictions

Slide 44



Workers’ compensation left unmanaged will result

in constantly increasing costs well beyond tolerable

percentages. It is only through knowledge of how

the workers’ compensation system works and a

thoughtful disciplined approach to managing your

district operations that you can manage to keep the

cost tolerable and to manage each and every claim

very well from start to finish.

Thank you for the opportunity to teach.







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