There are several things an employer can do to safeguard employees and manage the risk of California Workers Compensation claims. These are:
1. SCREEN WELL BEFORE YOU HIRE THAT EMPLOYEE
Reducing the frequency of your claims begins with hiring the right people for the jobs and duties they perform. Assuring that you are hiring an "A" player will not only improve the productivity and efficiency of your company, but may decrease your workers' comp costs. Prospective employees that have a history of "job hopping" and short-term employment relationships may also have a history of California Workers Compensation claims. People who have filed fraudulent California Workers Comp claims are often characterized as "quitting" their job, followed by periods of non-employment. Although you may not discriminate against an applicant on the basis of filing a California Workers Comp claim, employers should look out for applicants with a spotty job record. Do your homework on each and every applicant, diligently confirming employment dates and reasons they left their jobs. Also remember to do the following:
Conduct a thorough background check (Research gaps and transitions in employment) Require a pre-employment physical when appropriate (Typically, there must be a relevant and bona-fide occupational qualification for the testing). Institute a pre-employment drug testing program.
2. KEEP SAFETY TOP OF MIND THROUGH TRAINING AND SAFETY PROGRAMS
Employees must constantly be made aware of the hazards that in the workplace and their potential consequences. Ill-informed or untrained workers can be contributing factors to occupational injuries. Although California Workers Comp is a no-fault insurance (the insured may pay regardless of who is at fault), many employees caught in accidents can blame their lack of knowledge or training as a contributing factor. To improve safety in the workplace, managers must initially and periodically train employees on proper safety techniques and practices.
Incorporating the training of specific procedures and responsible work practices is an ongoing responsibility. Close the skills gap and keep safe work practices at the "top of mind" for employees. Many safety-conscious employers that I have inspected have large signs that display the number of days since a loss-time injury. Many other successful safety managers have a safety-conscious award that they use to promote individuals "caught in the act" of taking the extra time to following safety procedures. Also follow these best practices:
Keep your Injury and Illness Prevention Plan (IIPP) up to date. Your employee handbooks should require immediate notification of any injury. Hold safety training meetings on a monthly basis (especially to avoid common injuries at your workplace). Conduct periodic inspections. Abate hazards to avoid injury (document in your IIPP binder). Offer group and individual incentives for safety-conscious employees.
3. GIVE THEM MORE BENEFITS
Offering medical insurance and retirement benefits provides employees with a higher quality of life. Employees who are uninsured often turn to workers' compensation insurers to pick up the bill when it comes to "Monday morning" minor strains and sprains, the most common of all injuries. When faced with hefty bills, employees may file fraudulent claims to California workers' compensation insurance carriers rather than purchase health care out of pocket.
Providing health insurance may afford companies special discounts of 5 to 10% off annual health insurance premiums to help offset the cost of benefits when combined with Workers Comp. Workers Compensation insurers have a strong motivation to reward you; their exposure to fraudulent and non-occupational claims decreases significantly when employees have coverage elsewhere. For example, a joint partnership with Blue Cross of CA and Fremont Insurance may provide a 10% credit to your Workers Compensation premiums in their preferred provider network program. Qualifications apply, so check with your broker.
Another occupational benefit is the implementation of an early return to work program. This program gives employee's modified duty when recovering from an injury. Implementation of a program will decrease the cost of indemnity payments (lost wages) to the insurer, thus lowering the overall cost of the claim. Another benefit of this program is the continued engagement of the employee. When employees are fully engaged in their work, they are less likely to consider alternatives to resolving their claims of Workers Compensation. With the proper amount of time, rehabilitation, and care, your employee will back to work.
4. TAKE CARE OF YOUR EMPLOYEES
Employees injured on the job often feel apologetic about the damage they have done. Some even feel guilty for tarnishing the company's safety record or reputation. In any case, don't let your employee feel alienated or rejected in the wake of an injury. That emotional separation from the employer commonly fuels employee decisions to hire an attorney or get legal advice regarding their claim. When workers' comp claims are litigated, the cost of claims generally rises. This can affect the loss experience of your company and lead to increases in loss reserves and even your experience modification factor.
Take care of your employees and tend to their every need, especially when a workplace injury occurs. Employees who have been treated fairly rarely see the need to sue their employer for benefits from workers' compensation insurance claims. Follow these steps:
Is the employee is OK. Does the employee feels safe. Does he or she feel discomfort or pain? Use a fitness for duty test. Avoid "alienating" employees; spend time caring. In the event of an emergency, take employee to medical provider of choice. In the event of an emergency, obtain access to medical records. In the event of an emergency, correspond with their physician.
5. INVESTIGATE AND LEAVE NO STONE UNTURNED!
Whenever an injury occurs, your government-mandated injury and illness prevention plan (IIPP) requires you to launch an investigation of the accident. Take copious notes and pictures, if possible. Obtain facts about the events and detailed descriptions of the physical characteristics of the claimants, machinery, equipment, facilities, conditions and environment. Ask witnesses to describe the accident in detail and to sign off on their statements. Thorough investigation records that are accurate and timely provide incredible insight into the claim. When a litigated claim finally goes to court or appeal, 18 to 24 months may have passed. Without a detailed description documented on paper, what the employee/claimant says might prevail. Keeping good records can help minimize the cost of the claim. Always remember to:
Take thorough witness statements. Survey the work area and conditions. Take photographs of the work area (if possible). Maintain investigation records in your IIPP. Update your OSHA 300 log (repeating injury).
6. MANAGE YOUR CLAIMS TO CLOSURE
Claims that are not closed in a timely manner increase your experience modification factor and, thus, your California workers' compensation premiums. By staying in touch with the medical provider (ideally an industrial medical clinic), employees, and other parties, you can help close out claims and keep your experience low. After a claim is reported to your workers' compensation CA insurance carrier, a loss-reserve is set aside on your policy based on anticipated future costs to return the employee to work. Such expenses may include medical costs, indemnity payments (lost wages due to injury), vocational rehabilitation, and temporary or permanent disability.
Once a year, your California workers' compensation carrier sends a report card to the government agency that calculates your experience modification factor for the upcoming policy year. The "Unit Statistical Report" provides workers' comp bureaus with information both on premiums paid, and losses incurred as a result of injuries. If you have open claims during the time that your unit statistical report is calculated, your experience modification factor may be overstated. Always remember to:
Maintain a good relationship with injured employees. Report the claim in a timely fashion. Obtain and audit provider invoices. Correspond with claims adjuster; Keep a file. Take steps to close claims.
7. KEEP YOUR 'EX-MOD' LOW
Be sure to request a copy of your experience modification (often referred to as your "ex-mod") worksheet from your state workers' compensation bureau. This document provides the calculation and factors involved in the development of your mod. Businesses are often overcharged on workers' compensation insurance premiums due to inaccurately calculated experience modification factors. Another report you should request is your loss run report. This report from your carrier provides you with an accounting of your paid-in premium and your open and closed claims by policy year. Review any open claims and examine any outstanding loss reserves. Be aware that the unit statistical report is sent out 6 months before the NAD
Know that the calculation date is 2 months before the NAD. Request copy of loss runs, unit stat and experience mod worksheet from carrier. Take the initiative: In California, you can dispute your experience mod factor!
CONCLUSION
Like many issues that plague businesses today, there is only so much that you can control regarding your costs for Workers Compensation coverage. Failed and insolvent insurance carriers have left the few players in the market holding the seller's market hostage due to limited underwriting capacity. The underlying imperative to prudent businesses is to manage your controllable costs or hire a firm that with a comprehensive soup-to-nuts solution. In the end, you will find that a concerted approach with your management team, outside resources, and willing employees will be just the ticket to lowering your California Workers Comp premiums. A good insurance broker will help you implement all of the above mentioned suggestions at little or no cost.
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