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Bernstein - Containing the cost of workers comp bernstein


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Containing the Cost of Workers’ Compensation

Steven M. Bernstein

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Bernstein - Containing the cost of workers comp bernstein

  1. 1. Containing the Cost of Workers’ Compensation<br />Presented by:Steven M. Bernstein, Esq.<br />(813) 769-7513<br />Fisher & PhillipsLLP<br />ATTORNEYS AT LAW<br />Solutions at Work®<br /><br />Atlanta · Charlotte · Chicago · Cleveland · Columbia · Dallas · Denver · Fort Lauderdale · Houston · Irvine · Kansas City · Las Vegas · Los Angeles<br />Louisville · New England · New Jersey · New Orleans · Orlando · Philadelphia · Phoenix · Portland · San Diego · San Francisco · Tampa · Washington, DC<br />
  2. 2. Origins of Workers’ Comp<br />Instituted by States at Turn of Century<br />Job safety was a major problem<br />Employers were constantly in court<br />Workers' Comp was seen as a way out<br />Means of feeding family and paying medical bills<br />Means of spreading the risk & reducing litigation<br />Employers welcomed the exclusion<br />
  3. 3. A Century Later<br />The System Has Turned Into a Monster<br />By all accounts, it is out of control<br />Entitlement/lottery mentality<br />Cottage industries<br />Talk of legislative reform goes nowhere<br />
  4. 4. THE COSTS<br />Fastest Growing Labor Cost in the Country<br /><ul><li>Estimated at $100 billion/year
  5. 5. Costs doubling every four years
  6. 6. Premiums rising 10% every year
  7. 7. 40% of payroll costs in construction
  8. 8. 15% of payroll costs in manufacturing</li></li></ul><li>MOST COSTS OCCUR AT BACK END<br />Where do costs come from?<br /><ul><li>36% for back, spine & other strains
  9. 9. 26% for slip and falls
  10. 10. 14% struck by objects
  11. 11. 5% for machinery accidents
  12. 12. 5% for vehicular accidents
  13. 13. 85% could have been avoided with safer practices</li></li></ul><li>HOW DID WE GET HERE?<br />Attorneys<br />More involved now than ever<br />Make the case 15 times more expensive<br />Contingency fees responsible for 50% of all costs<br />Prolonged disability leads to greater hourly return<br />Options include caps and ADR mechanisms<br />
  14. 14. RESTORATION OF FEE CAPS<br />Florida’s system became highly fee driven<br />Legislature amended statute in 2003<br /><ul><li>Provided sliding contingency fee scale
  15. 15. Struck down as ambiguous in Murray case</li></ul>In 2009, HB 930 restored attorney fee caps<br />Amended §440.34(3) to remove ambiguity<br />Claimant no longer entitled to “reasonable fee based on hourly rate<br />Has dramatically reduced state insurance rates<br />No longer among top 10 in country<br />Constitutional challenges remain a possibility<br />
  16. 16. HOW DID WE GET HERE?<br />Doctors<br />More "specialists" backing fraudulent claims<br />Medical expenses amount to 40% of benefit costs<br />Doctor shopping is common<br />Encouraged to overtreat patients<br />Need more objective definitions for impairment<br />
  17. 17. GOVERNMENT RESPONSE<br />State Legislation<br />Statutory reform<br />Settlement mechanisms<br />Anti-fraud legislation<br />Special investigative units<br />Drug-free workplace program<br />Anti-Retaliation Statute<br />
  18. 18. GOVERNMENT RESPONSE<br />Federal Legislation<br />ADA<br /><ul><li>Focus on ability</li></ul>FMLA<br /><ul><li>Focus on minimum leave</li></ul>OSHA <br /><ul><li>Focus on workplace safety</li></ul>COBRA <br /><ul><li>Benefits continuation</li></ul>HIPAA<br /><ul><li>Privacy amendments</li></li></ul><li>EXTERNAL RESPONSE INSUFFICIENT<br />Employers Are Getting Hit on All Sides<br />Lack of support from carriers<br />Lack of concern for long-term interests<br />Employers increasingly isolated<br />Need for comprehensive internal program<br />Bring costs down to manageable levels<br />Most effective response is a proactive one<br />
  19. 19. SO WHAT CAN YOU DO?<br />Experience has taught us that it takes commitment from the top down.<br />You must commit to a written plan that is tailored to the needs of your organization.<br />Cost-containment is a cultural mindset.<br />This culture must be embraced from the highest levels within the organization.<br />It must also pushed down to the lowest levels of supervision and beyond.<br />Someone must be accountable for execution.<br />
  20. 20. ESTABLISH A COST-REDUCTIONPROGRAM<br />Put it in writing<br />Make someone responsible<br />Give them time, resources and authority<br />Implement across company lines<br />Make cost reduction a top priority<br />Allocate cost between departments<br />
  21. 21. EVALUATE YOUR CLAIMS HISTORY<br />Get an overview<br />Ask why costs are so high<br />Evaluate claims over 5-year period<br />Avoid generalizations<br />Compile objective and accurate information<br />Look for general patterns<br />Review files for suspect claims<br />Review OSHA 200 and 300 logs<br />
  22. 22. GET ACQUAINTED WITH STATEPROCEDURES<br />Knowledge is essential<br />State laws may vary<br />Don't leave it up to your lawyer or carrier<br />Get personally involved<br />Provide input on settlement vs. litigation<br />Don't wait until the claim is filed<br />Attend educational updates<br />
  23. 23. MONITOR COMPLIANCE WITHAPPLICABLE LAW<br />Audit your plan for compliance<br />Select employees carefully, but legally<br />Train supervisors on ADA, FMLAand other laws<br />Observe State drug testing and retaliation laws<br />Observe bargaining obligations<br />
  24. 24. NETWORK WITH AREA EMPLOYERS<br />Seek out employers in your area/industry<br />Develop sources of information<br />Explore risk sharing possibilities<br />Participate in local, State and national business associations/chambers<br />
  25. 25. PARTNER WITH YOUR INSURANCEBROKER<br />Require periodic file reviews<br />Work towards resolution<br />Attend mediations and hearings<br />Treat all claims as a significant concern<br />Demand timely disposition<br />Question reserve amounts and practices<br />Consider unbundled services<br />Obtain access to on-line claims systems<br />Access adjuster notes and follow progress<br />Weigh in on case strategy <br />
  26. 26. KNOW YOUR INSURANCE POLICYINSIDE-OUT<br />Don’t just accept the policy in front of you<br />Read it with a critical eye<br />Follow the money<br />Correlation between current experience and future premiums<br />Who pays for safeguards?<br />Who picks the attorneys?<br />How does adjuster get paid?<br />
  27. 27. LOOK OUT FOR CONFLICTINGINTERESTS<br />Develop working knowledge of your policy<br />Claim handlers may have different interests<br />Discuss any concerns with adjusters and attorneys<br />Inviting competitive bids every 3-5 years<br />Ensure the most competitive pricing.<br />As organization's representative, always look out for its best interests...alone<br />
  28. 28. CONSIDER SELF-FUNDING<br />Employers are returning to this<br />Willing to live with more risk for reduced cost<br />Self-funding -- pay benefits directly<br />Self-insurance pools<br />Individual self-insureds<br /><ul><li>Must have net worth of $250,000</li></ul>Wrap-up policies<br />Retrospective rating plans<br />
  29. 29. MAKE SAFETY A CONDITION OFEMPLOYMENT<br />Enforce a “zero-tolerance” safety policy<br />Drive the right incentives<br />Use the “carrot and the stick”<br />Change the mindset<br />Apply safety rules uniformly and consistently<br />
  30. 30. DEVELOP EFFECTIVE SAFETY PROGRAMS<br />Safety and health management programs<br />Periodic self-audits<br />Safety committees<br />Accident/Incident investigation<br />Training<br />Disciplinary procedures<br />
  31. 31. USE MEANINGFUL REPORTING FORMS<br />Avoid canned forms<br />Devise personalized documents<br />Use them consistently<br />Pin down the employee's story<br />Attach witness statements<br />Obtain signature of management<br />
  32. 32. CHOOSE MEDICAL PROFESSIONALS CAREFULLY<br />Choosing from a panel or going outside<br />Choose primary care providers carefully<br />Develop trusting relationship<br />Give doctor a workplace tour<br />Battle of doctors<br />Get the best one you can<br />Controlling primary care = controlling cost<br />Set up claim management protocols<br />Develop relationship over time<br />
  33. 33. RETAIN AGGRESSIVE ATTORNEYS AND ADJUSTERS<br />Retain the right to choose<br />Negotiate into policy<br />Insist on prompt communication<br />Shop around<br />Look for creative ideas/strategies<br />Insist on individualized attention<br />One who puts your interests first<br />Avoid contingency fees on gross billing<br />Make sure they actually process the bill<br />
  34. 34. TAKE ACTION ON EACH FILE SEPARATELY<br />Every file is different<br />Review every file on its own<br />Don't assume it is getting individual attention<br />Select a separate course of action<br />Negotiate for unilateral authority<br />Move quickly and be proactive<br />Look for indications of fraud<br />Use counsel to obtain privilege<br />Be a “squeaky wheel”<br />Recognize OSHA, multi-employer and civil litigation exposure<br />
  35. 35. VIGOROUSLY CONTEST FRAUDULENT CLAIMS<br />Avoid a "soft touch" reputation<br />Fraudulent claimants file other claims<br />Warn employees of the consequences<br />Go on the offensive<br />Look for delayed notice<br />Get a full release of all claims<br />Get personally involved<br />Report suspected fraud<br /><ul><li>1-800-378-0445</li></ul>Be prepared to try the case<br />
  36. 36. HIRE DEFENSIVELY<br />Use a comprehensive application<br />Conduct thorough reference checks<br />Consider credit checks<br />Interview effectively<br />Terminate for falsifying information<br />Focus on pattern absenteeism<br />Avoid prohibited inquiries<br />Use introductory period aggressively<br />
  37. 37. ADMINISTER AGILITY TESTS<br />Job-related and consistent with business necessity<br />Can applicant perform essential functions?<br />Have them show you how they would do task<br />Administer to employees in same classification<br />
  38. 38. ADMINISTER A SUBSTANCE ABUSE POLICY<br />Legal program to remove current users<br />Correlation between drug use and increased cost<br />Statistically lose more time due to accidents<br />Florida actually provides incentives for those who test<br /><ul><li>Carriers often do as well</li></li></ul><li>DRUG FREE WORKPLACE PROGRAM<br />Compliant programs qualify for 5% discount on compensation premium rate<br />Requirements set forth under §441.102<br />Must test except on a random basis<br />May provide for immediate discharge<br />May also require completion of evaluation, counseling and rehabilitation assistance<br />Beware of second chances for safety-sensitive or customer contact positions<br />Lab must be approved by State Agency for Health Care Administration<br />
  39. 39. MAKE LEGAL POST-OFFER INQUIRIES<br />Take advantage of window of opportunity<br />Consider mandatory post-offer exam<br />Condition offer on exam results<br />Inquire into pre-existing conditions that may qualify for subsequent injury trust funds<br />Reduce chance of injury/increase effectiveness<br />
  40. 40. ASSIGN WORKERS TO JOBS THEY CAN PERFORM<br />Determine essential functions of each job<br />Identify job-related qualification standards<br />Ascertain physical requirements<br />Consider specific, updated job descriptions<br />No need to create new position<br />Consider reassignment to vacant position<br />Stress safety at orientation<br />
  41. 41. APPLY A UNIFORM MEDICAL LEAVE POLICY<br />Consider medical authorization prior to return<br />Put it in writing, disseminate and train managers<br />FMLA need not interfere<br />Run FMLA leave concurrently<br />Consider termination on leave expiration<br />ADA accommodation issues<br />Give COBRA notice<br />
  42. 42. PERIODICALLY EXAMINE CURRENT EMPLOYEES<br />Job-related and consistent with business necessity<br />Fitness for duty exams<br />Determine whether employees remain able to perform essential job functions<br />Mandated DOT, OSHA and other testing<br />
  43. 43. CONSIDER MANAGED CARE ARRANGEMENTS<br />Must be approved by Agency for Health Care Administration<br />Coordinates medical care to reduce unnecessary treatment or cost<br />Programs must include written statement of objectives and procedures for dealing with sub-standard medical services<br />May request utilization review by Division of Workers’ Compensation at (850) 413-3100<br />
  44. 44. ENCOURAGE OPTIONAL TESTING PROGRAMS<br />Adopt a voluntary health program<br />Provide opportunities and reminders<br />Consider wellness programs, blood pressure screening, cancer detection, etc.<br />
  45. 45. PROMPTLY RETURN EMPLOYEES TO WORK<br />Bone of contention<br />Light duty implications of FMLA/ADA<br />Consider temporary light duty<br />Explain terms at outset<br />Designate a coordinator to assist in return<br />Show genuine concern<br />Reassure employee<br />Keep them involved<br />Eliminate incentives not to work<br />
  46. 46. CREATE TRANSITIONAL DUTY PROGRAMS<br />Establish firm time-tables<br />90-day programs are the norm<br />Provide additional 90 days at mgmt. discretion<br />Enforce the time frame uniformly<br />Don't create long-term under-classes <br />
  47. 47. TRAIN MANAGERS TO BECOST-CUTTERS<br />Front-line supervisors have greatest impact<br />First line of defense<br />Educate them on true cost of insurance<br />Respond immediately/report accidents<br />Refer to appropriate physician<br />Train on accident investigations<br />Know safety procedures<br />Accident diagnosis and prevention<br />Show personal concern for employee<br />Recognize fraudulent claims<br />Reinforce good behavior<br />
  48. 48. TRAIN EMPLOYEES TO WORK SAFELY<br />Implement a comprehensive safety program<br />Consider a safety committee<br />Continuously publish/update safety rules<br />Require prompt injury reporting<br />Enforce all safety rules<br />Respond with appropriate discipline<br />Consider safety bonuses, gain sharing and other incentives<br />
  49. 49. MANAGE INJURIES BEFORE THEY MANAGE YOU<br />Follow up with worker by telephone<br />Adopt a pro-active approach<br />Involve supervisor in return process<br />Emphasize prompt treatment and early return<br />Consider a "transitional work center"<br />Re-design jobs to improve ergonomics<br />Computerize claims data<br />
  51. 51. Fisher & PhillipsLLP<br />ATTORNEYS AT LAW<br />Solutions at Work®<br />Final Questions<br />Steven M. Bernstein <br />Fisher & Phillips LLP<br />2300 SunTrust Financial Centre<br />401 E. Jackson Street<br />Tampa, Florida 33602<br /><br />(813) 769-7500<br />Atlanta · Charlotte · Chicago · Cleveland · Columbia · Dallas · Denver · Fort Lauderdale · Houston · Irvine · Kansas City · Las Vegas · Los Angeles<br />Louisville · New England · New Jersey · New Orleans · Orlando · Philadelphia · Phoenix · Portland · San Diego · San Francisco · Tampa · Washington, DC<br />