Money Saving Tips to Contain rising Workers Compensation Costs

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Presenters:

Andrea Hiltbrunner, Claims Director, Everest National Ins. Co.

andrea.hiltbrunner@everestre.com

Ronald Adler, President-CEO Laurdan Associates, Inc.

radler@laurdan.com

Hosted by:

Ina Fargher

Aspen Risk Management Group, Inc.

ifargher@aspenrmg.com

Money Saving Tips to Contain

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The information presented in this material has been developed from sources believed to be reliable. It is presented for informational purposes only and should not be constructed as legal, professional or business advice.

Everest National Insurance Company and its affiliates accepts no responsibility for the accuracy or completeness of this material. It makes no representations or warranties of any kind herein and disclaims all such representations and warranties.

Neither Everest National Insurance Company or its affiliates will be liable for any damages alleged to be caused by the information contained herein. It recommends you consult with legal counsel and/or other professional persons before applying this material. This information is solely for illustrative purposes and does not constitute a contract.

Only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions.

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Making a Difference with Rising Claim Costs

 Claim Costs:

 What studies show…

 Claim Litigation:

 Why does an injured employee seek an attorney?

 What can you do to prevent

 What can happen to the simple claim after litigation

 Timely Claim Reporting:

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Rising Claim Costs…

• Average Cost of CA Lost Time Claim per CWCI - $66,922

– $20,000 higher than 2005

• CA WC Loss and Expense Payments in 2011(WCIRB)

– Overall increase of 11.7% compared to 2010

• $4.4 billion in medical payments • $3 billion for indemnity payments

– WCIRB Analysis of Changes in Indemnity Claim Frequency

(August 2012 study comparing accident years 2009-2010 to 2007-2008)

• First indemnity claim frequency increase in over a decade in 2010 (9.1%) • Medical only to indemnity conversion increase of 12%

• Percentage of post-termination claims doubled • Psyche component increased 29-46%

• Multiple body part claims increased to 65% in 2009

* Workers’ Compensation Research Institute (WCRI) – ―Unnecessary Litigation In Workers’ Compensation Claims Process : Training & Communication‖, Analysis of Changes in Indemnity Claim Frequency

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Rising Claim Costs cont.

• National Council on Compensation Insurance (NCCI)

– Analyzed 2.6 million claims countrywide (DOI 1998-6/2011)

– Temporary disability duration increasing since 2006 with 2011 showing average 149 days

– Longest duration seen with construction industry claims

– Significant decrease in duration with hernia claims

– Where opioids prescribed in first 12 mos., 50-100% longer duration

– Temporary disability duration from sprained ankles & lower backs increased substantially by 52% & 43%

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Claim Litigation

• Applicant attorneys (CA) paid $387 million in 2011

– An 11% increase from 2010.

– Number one factor impacting claim costs (CWCI)

• Why do claim costs increase?

– Expensive to defend

– Minor back strain can spread to legs, feet, arms, internal, psych, diabetes, high blood pressure or aggravation to all

– When medical opinion(s) are needed, costs can range from $2,500 - $7,500 each, minimum 3 mos. to obtain State panel list of physicians (CA)

– Claims remain open longer, waiting on medical reports, court hearings, retro

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Claim Litigation

• Why does an injured employee seek an attorney?

– WCRI study interviewed 6,823 injured workers and found:

• Primary motivator is fear of job security (23% feared losing job) • Severity of injury

• Education level

• Length of employment

• What can an employer do to avoid litigation?

– Report all injuries as quickly as possible

– Investigate injury, take statements from injured & witnesses, photos…

– Provide medical care quickly (CA MPN-PPO)… www.everestnational.com/workcomp

– Don’t abandon employee once claim is reported/remain involved

– Communicate to employee (weekly meetings, modified work meetings)

– Have a Return to Work plan

• Remove employee concern for job security • Keep employee physically and mentally active

– Train supervisors how to respond to injury, knowledge of work comp basics

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Timely Claim Reporting

 Timely reporting is proven to reduce lost time days, decrease claim costs overall, decrease litigation and quicken recovery

o When claims are reported beyond three weeks, studies have shown significant cost increases by as much as 29%

o When claims are reported beyond 11 days, studies have shown a 29% increase in litigation

 Immediately report all injuries, including those you refute, so the best investigation and defense may be conducted

o Communicate all known facts at time of reporting and as claim proceeds

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Make an Impact on Claim Costs!

• Report all injuries as quickly as possible

• Implement an Early Return to Work program

• Communicate often with your injured

employee

• Educate management

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Money Saving Tips to Contain

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Disclaimer

• The material presented in this presentation represents the

views of the speaker and is not intended to provide legal or tax advice as to any of the subjects mentioned, but rather is

presented for general information only. You should not rely on this general information to address specific circumstances. You should consult knowledgeable legal counsel or other

knowledgeable experts as to any legal or tax questions you may have.

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Agenda

• Claims Prevention:

–

Aligning policies with business and compliance

objectives

–

Implementing effective communication practices

• Claims Management:

–

Assessing policies and practices that deter reporting

–

Preventing retaliation

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Claims Prevention: Aligning Your Policies

• Six Critical Questions:

1. Has your company defined its business and compliance objectives?

2. Has your company developed employment, workers’

compensation, and workplace safety policies and practices? 3. Does your company consider how external factors (such as

laws and regulations) and internal factors (such as the diversity and skills of your employees) affect:

• Your business and compliance objectives

• Your employment, WC, and workplace safety policies and

practices?

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Claims Prevention: Aligning Your Policies

• Six Critical Questions:

4. Does your company's culture and management style encourage workplace safety?

5. Does your leadership team support your company’s employment, workers’ compensation, and workplace safety policies and practices?

6. Does your company measure the successes and failures of supervisors and employees in achieving workers’

compensation and workplace safety goals

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Claims Prevention: Implementing Effective

Communication Practices

1. Your company should promulgate a formal written safety

program and message that emphasizes the alignment of

workplace safety with your business objectives and success

2. Your company should consider the integration of safety

processes into day-to-day business and customer services processes

3. Your company should not confuse regulatory compliance

with its safety management program, which should define, address, and manage the causes of unacceptable workplace safety risks

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Claims Prevention: Implementing Effective

Communication Practices

4. Your company’s safety management program and

message should stress that safety is everyone’s

responsibility, not just one department or specific

individuals

5. Your company should develop an annual workplace

safety action plan that corrects safety deficiencies,

identifies potential problems, incorporates best practices,

and repeats your workplace safety message

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Claims Management: Assessing Policies and

Practices that Deter Reporting

Six Critical Questions:

1. Do your company’s employment practices—including its hiring,

performance management, career development, and disciplinary activities—support and reinforce your company’s WC and

workplace safety programs and claims reporting?

2. Do your company’s employment policies and employee

communications send a uniform message about the importance of workplace safety and the requirements of claims reporting?

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Claims Management: Assessing Policies and

Practices that Deter Reporting

3.

Do you survey your supervisors and managers to determine

their understanding of and support for your company’s workplace safety programs and your injury reporting requirements?

4. Do you survey your employees to determine their

understanding of and support for your company’s workplace safety programs and the value of promptly reporting injuries?

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Claims Management: Assessing Policies and

Practices that Deter Reporting

5. Does your company commit sufficient resources to ensure the control and prompt action to injuries and workplace safety hazards?

6. Do your company’s compensation and rewards systems

encourage prompt reporting of workplace safety hazards and injuries?

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Claims Management: Preventing Retaliation

Six Critical Questions:

1. If an employee wants to file an internal complaint, must the employee follow the chain of command to file the complaint?

2. Does your company deny employment to an individual who has filed a charge or claim of WC or workplace safety against his/her previous employer?

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Claims Management: Preventing Retaliation

3. Has your company altered the terms and conditions of employment of an employee because the employee filed an internal complaint or claim of WC or workplace

safety?

4. Has your company denied a raise, a promotion, training opportunities, or career advancement to an employee

because the employee filed an internal complaint or claim of WC or workplace safety?

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Claims Management: Preventing Retaliation

5. Has your company disciplined or fired an employee

because the employee filed an internal complaint or claim of WC or workplace safety?

6. Has your company disciplined or fired an employee because the employee cooperated with an internal investigation of alleged workplace safety violations?

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Presenters’ Contact Information: Andrea Hiltbrunner, Claims Director, Everest National Ins. Co.

andrea.hiltbrunner@everestre.com

radler@laurdan.com