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There are several things an employer can do to protect workers and manage the risk of compensation claims for California workers. These are:
1. CHECK WELL BEFORE HIRING THIS EMPLOYEE
Reducing the frequency of your claims starts with hiring the right people for the jobs and tasks they do. Ensuring that you are hiring an “A” player will not only improve your company’s productivity and efficiency, but can also reduce your employees’ compensation costs. Prospective employees who have a history of “job hopping” and short-term employment may also have a history of California workers’ compensation claims. Individuals who have filed fraudulent claims for California Workers Comp are often referred to as “quitting” their job, followed by periods of non-employment. Although you must not discriminate against an applicant when applying for unemployment benefits in California, employers should be on the lookout for applicants with patchy employment records. Do your homework on each applicant, carefully confirming employment dates and reasons why they left their job. Also remember to do the following:
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Conduct a thorough background check (research gaps and transitions in employment)
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If necessary, request a pre-employment physical examination (usually a relevant and credible professional qualification must be presented for examination).
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Establish a pre-employment drug testing program.
2. MAINTAIN SAFETY THROUGH TRAINING AND SAFETY PROGRAMS
Employees must be constantly made aware of the dangers in the workplace and their possible consequences. Poorly informed or untrained workers can contribute to workplace accidents. Although California Workers Comp is no-fault insurance (the insured can pay regardless of who is at fault), many employees affected by accidents can blame their lack of knowledge or training as a contributing factor. To improve safety in the workplace, managers must first and regularly train employees in proper safety techniques and practices.
Incorporating training on specific procedures and responsible labor practices is an ongoing responsibility. Close the skills gap and ensure safe work practices are “on top” for employees. Many safety-conscious employers I’ve inspected have large signs showing the number of days since a lost-time accident. Many other successful safety managers have a safety-conscious award that they use to encourage individuals who are “caught in the act” by taking the extra time to follow safety procedures. Also, follow these best practices:
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Keep your Injury and Disease Prevention Plan (IIPP) up to date.
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Your employee handbooks should call for immediate notification of violations.
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Conduct monthly safety training (particularly to prevent common injuries in your workplace).
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Conduct regular inspections.
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Eliminate Hazards to Avoid Injury (document in your IIPP folder).
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Offer group and individual incentives for safety-conscious employees.
3. GIVE YOU MORE BENEFITS
Offering health insurance and retirement plans gives employees a better quality of life. Uninsured employees often turn to the employers’ liability insurance association to foot the bill when they suffer minor strains and sprains, the most common of all injuries, on “Monday morning.” When faced with high bills, employees may file fraudulent claims with California workers’ compensation insurance instead of purchasing health care out of their own pockets.
Providing health insurance can give companies special discounts of 5 to 10% on annual health insurance premiums to offset the cost of benefits combined with Workers Comp. Workers compensation insurers have a strong motivation to reward you; Your risk of fraudulent and non-occupational claims is significantly reduced when employees are otherwise insured. For example, a joint partnership with Blue Cross of CA and Fremont Insurance can provide a 10% credit toward your Workers Compensation awards in their preferred provider network program. Qualifications apply so check with your agent.
Another operational benefit is the implementation of a program for early return to work. This program gives the employee modified duties when recovering from an injury. Implementing a program reduces the cost of paying compensation (lost wages) to the insurer, thereby reducing the overall cost of the claim. Another benefit of this program is the ongoing engagement of the employee. When employees are fully dedicated to their jobs, they are less likely to consider alternative ways to resolve their workers’ compensation claims. With the right amount of time, rehabilitation, and care, your employee will return to work.
4. TAKE CARE OF YOUR EMPLOYEES
Employees who have been injured at work often apologize for the damage they caused. Some even feel guilty for tarnishing the company’s safety record or reputation. Never allow your employee to feel alienated or rejected after an injury. This emotional disconnect from the employer often fuels employees’ decisions to hire an attorney or seek legal advice regarding their claim. Legal battles over work injury claims generally increase the cost of the claims. This can impact your company’s claims experience, leading to an increase in claims reserves and even your experience modifier.
Take care of your employees and take care of their needs, especially when there is an accident at work. Treated employees rarely see the need to sue their employer for benefits from workers’ compensation insurance. Follow these steps:
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Is the employee OK?
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Does the employee feel safe?
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Is he or she uncomfortable or in pain?
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Complete a fitness for service test.
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Avoid “alienating” employees. spend time caring.
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In an emergency, take the employee to the doctor of your choice.
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Get access to medical records in an emergency.
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In an emergency, contact your doctor.
5. INVESTIGATE AND DO NOT LEAVE ANY STONE UNMISTAKED!
If an injury occurs, your government-mandated Injury and Disease Prevention Plan (IIPP) requires you to initiate an investigation into the accident. If possible, take lots of notes and pictures. Get facts about the events and detailed descriptions of the plaintiffs’ physical characteristics, machinery, equipment, facilities, conditions and environment. Ask witnesses to describe the accident in detail and to sign their statements. Thorough investigative records that are accurate and timely provide incredible insight into the claim. When a disputed claim eventually goes to court or appeal, 18 to 24 months may have elapsed. Without a detailed description documented on paper, the statement of the worker/applicant could prevail. Good records can help minimize the cost of the claim. Always remember:
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Make thorough testimonies.
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Check the work area and conditions.
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Photograph the work area (if possible).
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Maintain investigation records in your IIPP.
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Update your OSHA 300 (Repetitive Injuries) log.
6. MANAGE YOUR CLOSURE CLAIM
Claims that are not completed on time will increase your Experience Modification Factor and therefore your California Worker Compensation Awards. By staying in touch with the medical provider (ideally a medical clinic), staff and other parties, you can help close claims and minimize your experience. After a claim is reported to your CA workers’ compensation carrier, a loss reserve is accrued on your policy based on the estimated future cost of the worker’s return to work. Such expenses may include medical expenses, compensation payments (lost wages due to injuries), occupational rehabilitation, and temporary or permanent disability.
Once a year, your California workers’ compensation agency sends a certificate to the government agency, which calculates your experience modifier for the upcoming insurance year. The Unit Statistical Report provides professional bodies with information on both premiums paid and losses due to injuries. If you have outstanding debts at the time your unit statistical report is being calculated, your experience modifier may be overstated. Always remember:
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Maintain a good relationship with injured employees.
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Report the damage in good time.
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Receive and review vendor invoices.
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Correspond with claims adjuster; Keep a file.
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Take steps to close claims.
7. KEEP YOUR ‘EX-MOD’ LOW
Be sure to request a copy of your experience modification worksheet (often referred to as an “ex-mod”) from your state worker’s compensation office. This document contains the calculation and factors involved in the development of your mod. Due to imprecisely calculated experience modification factors, companies are often burdened with excessively high premiums for industrial accident insurance. Another report you should request is your loss run report. This report from your carrier provides you with a statement of your paid premium and your open and closed claims by insurance year. Check all open claims and check all outstanding claims reserves. Note that the unit stats report is sent out 6 months before the NAD
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Note that the calculation date is 2 months ahead of the NAD.
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Obtain a copy of the Loss Runs, Unit Statistics, and Experience Modification Worksheet from the carrier.
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Take the initiative: In California you can challenge your experience factor!
CONCLUSION
As with many issues plaguing businesses today, there is only so much you can control when it comes to your workers compensation coverage costs. Failed and insolvent insurance carriers have left the few market players holding the seller’s market hostage due to limited underwriting capacity. The fundamental need for prudent businesses is to control your controllable costs or to hire a company for a total all-in-one solution. In the end, you’ll find that a concerted approach with your management team, outside resources, and willing employees is all you need to lower your California Workers Comp premiums. A good insurance broker will help you implement all of the above suggestions at little or no cost.
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