Work CompWork Comp-- Effective Cost Effective Cost ManagementManagement

Jacksonville Spring Forum on WorkersJacksonville Spring Forum on Workers’’ Compensation TopicsCompensation TopicsMay 3, 2011May 3, 2011

Work CompWork Comp-- Effective Cost Effective Cost ManagementManagement

Before a Claim Before a Claim OccursOccursAfter a Claim After a Claim OccursOccursWork Comp Work Comp Insurance and Insurance and Other Indirect Other Indirect CostsCosts

Before a Claim OccursBefore a Claim Occurs-- Hiring Hiring PracticesPractices

Where work comp claims startWhere work comp claims startEmployee selectionEmployee selection

Functional job descriptionsFunctional job descriptionsRecruitment and InterviewsRecruitment and InterviewsPrePre--employment background checks and FL DFS employment background checks and FL DFS Claims DatabaseClaims Database

DonDon’’t buy a claimt buy a claimCost vs. savingsCost vs. savingshttps://apps.fldfs.com/claimswebhttps://apps.fldfs.com/claimsweb

Before a Claim OccursBefore a Claim Occurs-- Hiring Hiring PracticesPractices

Before a Claim OccursBefore a Claim Occurs-- Hiring Hiring PracticesPractices

Beyond our scope of discussionBeyond our scope of discussion--ADA and Reasonable ADA and Reasonable AccommodationAccommodation

Conditional offers of employmentConditional offers of employmentPostPost--offer, preoffer, pre--employment employment physicals and medical physicals and medical questionnaires questionnaires Helps with major contributing Helps with major contributing factor provision of FL work comp factor provision of FL work comp lawlaw-- 51% related to on51% related to on--thethe--job job injuryinjuryConsult with HR professional and Consult with HR professional and attorneyattorneyJob accommodation network Job accommodation network http://askjan.orghttp://askjan.orgUS EEOC US EEOC www.eeoc.gov/policy/docs/preemwww.eeoc.gov/policy/docs/preemp.htmlp.html

Before a Claim OccursBefore a Claim Occurs-- Hiring Hiring PracticesPractices

DrugDrug--Free WorkplaceFree Workplace5% premium credit in FL, 7.5% in GA5% premium credit in FL, 7.5% in GAAn EmployerAn Employer’’s Guide to a Drugs Guide to a Drug--Free WorkplaceFree Workplace

http://www.myfloridacfo.com/wc/pdf/DFWPman.pdfhttp://www.myfloridacfo.com/wc/pdf/DFWPman.pdf

Exclusion of indemnity paymentsExclusion of indemnity paymentsHigher quality workforce = lower frequency of Higher quality workforce = lower frequency of claimsclaims

Before a Claim OccursBefore a Claim Occurs-- Hiring Hiring PracticesPractices

Work Comp and nonWork Comp and non--work comp impactswork comp impactsNational Institute on Drug Abuse Study found that drug National Institute on Drug Abuse Study found that drug using employees are:using employees are:

2.5 times more likely to have absences of eight days 2.5 times more likely to have absences of eight days or more or more

2.2 times more likely to request early dismissal or 2.2 times more likely to request early dismissal or time off time off

3 times more likely to be late for work 3 times more likely to be late for work

5 times more likely to file a work comp claim5 times more likely to file a work comp claim

Before a Claim OccursBefore a Claim Occurs-- Supervisor Supervisor TrainingTraining

Employee communication and relationshipsEmployee communication and relationshipsAccident reporting and investigation proceduresAccident reporting and investigation procedures

Timeliness of reportingTimeliness of reportingStatutoryStatutory-- 7 days of notice, 24 hours of death7 days of notice, 24 hours of death

Before a Claim OccursBefore a Claim Occurs-- Supervisor Supervisor TrainingTraining

Incident/Accident Incident/Accident reportreport

CausesCausesObservationsObservationsDocumentation Documentation and witnessesand witnesses

Before a Claim OccursBefore a Claim Occurs-- Medical Medical Provider SelectionProvider Selection

Selection of provider who works for youSelection of provider who works for youPartnershipPartnership-- understands and assists understands and assists employersemployers

Proper employee assessments and effective, Proper employee assessments and effective, efficient treatmentefficient treatmentStay at work/Return to workStay at work/Return to work

Board certified in occupational medicineBoard certified in occupational medicineScreening workScreening workProtocol and service expectations interviewProtocol and service expectations interviewFacilities tours (theirs and yours)Facilities tours (theirs and yours)

Before a Claim OccursBefore a Claim Occurs-- Safety and Safety and Health EnvironmentHealth Environment

Written safety manualWritten safety manual2% premium credit in FL2% premium credit in FL

Employee safety training and certificationsEmployee safety training and certificationsEmployee safety incentive programsEmployee safety incentive programsSafety committeeSafety committee

MakeMake--up of committeeup of committeePost accident reviewsPost accident reviews

Causes of incidents/accidentsCauses of incidents/accidentsInstitute changes to prevent future incidents/accidentsInstitute changes to prevent future incidents/accidentsOngoing assessments, inspections, checklistsOngoing assessments, inspections, checklists

OSHAOSHA

Before a Claim OccursBefore a Claim Occurs-- Safety and Safety and Health EnvironmentHealth Environment

Willful

Repeated

Serious, other than serious, or other specific violations

Failure to abate

Violating posting requirements (failure to post OSHA poster, OSHA 300 Annual summary, citations, etc.)

Failure to report fatality or catastrophic event within eight hours

Providing advance notice of inspection

Minimum: $5,000Maximum: $70,000

Maximum: $70,000

Maximum: $7,000

Maximum $7,000 per day for each day violation continues beyond abatement date

Maximum: $7,000

Maximum: $7,000

$1,000 fine or up to six months in jail or both

OSHA PENALTY SCHEDULE

After a Claim OccursAfter a Claim Occurs--CommunicationCommunication

Specific personnel to Specific personnel to manage cradlemanage cradle--toto--grave processgrave process

Direct employee for Direct employee for medical treatment and medical treatment and provide medical provide medical provider packetprovider packet

Employer authorization Employer authorization formformFitness for duty Fitness for duty disposition form and disposition form and copy of functional job copy of functional job descriptiondescription

After a Claim OccursAfter a Claim Occurs--CommunicationCommunication

Report claim to carrierReport claim to carrierManage fileManage file

EmployerEmployerEmployeeEmployeeAdjusterAdjusterMedical providerMedical providerAgentAgent

After a Claim OccursAfter a Claim Occurs-- Stay at Stay at Work/Return to WorkWork/Return to Work

Stay at work Stay at work Indemnification waiting periodIndemnification waiting period

7 days7 daysRetroactively paid if disability Retroactively paid if disability ≥≥ 21 days21 days

Return to workReturn to workAccording to the 2009 National Return to Work Week press releaseAccording to the 2009 National Return to Work Week press release::

4.1 million4.1 million employees experience workemployees experience work--related related injuries or injuries or illnessesillnesses in America each year.in America each year.1.1 million1.1 million have have lost work dayslost work days as a result of their injury or as a result of their injury or illness.illness.

According to the Bureau of Labor Statistics (BLS), According to the Bureau of Labor Statistics (BLS), the average time away from the average time away from work per injury was eight days.work per injury was eight days.

Employees who are Employees who are off work for more than 16 consecutive off work for more than 16 consecutive weeks rarely return to work.weeks rarely return to work.

0%

25%

50%

75%

100%

6 months 12 months 18 months 24 months

Time Away From Work

Cha

nce

of R

etur

ning

to A

ny W

ork

WORKERS’ COMPENSATIONReturn to Work Projection

Another Study Stresses the Correlation Between Length of Disability and Chance of Returning to ANY Work

After a Claim OccursAfter a Claim Occurs-- Stay at Stay at Work/Return to WorkWork/Return to Work

Employer BenefitsEmployer BenefitsBoosts Boosts moralemoraleKeeps injured employees productiveKeeps injured employees productiveDiscourages abuseDiscourages abuseReduces financial impactReduces financial impactProvides a Provides a proactiveproactive approach to approach to Cost ContainmentCost Containment

Employee BenefitsEmployee BenefitsMaintains full Maintains full earning capacityearning capacityMaintains productive mindsetMaintains productive mindsetPrevents them from becoming dependent on a disability Prevents them from becoming dependent on a disability systemsystemReinforces Reinforces managementmanagement’’s commitments commitment to employeeto employee’’s s wellwell--beingbeing

Work Comp Insurance and Other Work Comp Insurance and Other Indirect CostsIndirect Costs

Direct CostsDirect CostsProper class codesProper class codesRatesRates-- NCCI/FLNCCI/FLExperience modification factorExperience modification factor

3 oldest of last 4 years (20113 oldest of last 4 years (2011-- 2009, 2008, 2007)2009, 2008, 2007)Medical only vs. indemnityMedical only vs. indemnity-- 70% credit70% credit

FrequencyFrequencySeveritySeveritySignificant cost management opportunitiesSignificant cost management opportunities

$2,550$1,704$1,704$852$852.0173.01731.17391.1739$1,663$5,54410/1/0510/1/05FLFL

$4,419$2,946$2,946$1,473$1,473.0299.02991.16131.1613$2,881$2,88110/1/0610/1/06FLFL

3 yr-Prem Cost

2 yr2 yr--Prem Prem CostCost

1 yr1 yr--Prem Prem CostCost

Impact Impact on Modon Mod

Mod w/o Mod w/o LossLoss

Adjusted Loss

Actual Loss

DateDateStateState

Work Comp Insurance and Other Work Comp Insurance and Other Indirect CostsIndirect Costs

Cost management alternativesCost management alternativesDividendsDividends-- profit shareprofit share

Retrospective RatingRetrospective RatingDeductiblesDeductiblesSelfSelf--insurance, captives, ART programsinsurance, captives, ART programs

Work Comp Insurance and Other Work Comp Insurance and Other Indirect CostsIndirect Costs

Service CostsService CostsTPATPASafety and healthSafety and healthConsulting servicesConsulting servicesActuarial servicesActuarial servicesOthersOthers

Work Comp Insurance and Other Work Comp Insurance and Other Indirect CostsIndirect Costs

Indirect CostsIndirect Costs-- damage damage beneath the surfacebeneath the surface

$1

$4 to $10

Work Comp Insurance and Other Work Comp Insurance and Other Indirect CostsIndirect Costs

Indirect costs not covered by insuranceIndirect costs not covered by insuranceLost efficiency of injured employeesLost efficiency of injured employeesImpact on other employees at the accident siteImpact on other employees at the accident siteCost of hiring and/or training replacementsCost of hiring and/or training replacementsOvertime of other employees to make up for lost Overtime of other employees to make up for lost productionproductionExtra supervisory timeExtra supervisory time

Impacts an organizationImpacts an organization’’s competitivenesss competitiveness

Work Comp Insurance and Other Work Comp Insurance and Other Indirect CostsIndirect Costs

Affect profitabilityAffect profitabilityPer OSHA Statistics: One $2,300 claim costs Per OSHA Statistics: One $2,300 claim costs your company your company $12,650$12,650Assume a Assume a 10%10% profit marginprofit margin

Additional sales required to offset one $2,300 claim: Additional sales required to offset one $2,300 claim: $126,500$126,500

The Real Cost of Accidents Can Be Measured and Controlled

Cecil W. Powell & CompanyCecil W. Powell & Companywww.cwpowellins.comwww.cwpowellins.com

Since 1935Since 1935

Mission StatementMission StatementTo provide our clients the best possible product combined with uTo provide our clients the best possible product combined with unparalleled nparalleled

customer service while maintaining the highest standards of honecustomer service while maintaining the highest standards of honesty and sty and integrity, treating every one of our clients in the way we wouldintegrity, treating every one of our clients in the way we would like to be like to be

treated.treated.

Thank You!Thank You!

For copies or additional informationFor copies or additional information

Barry Whilden, Director of Large AccountsBarry Whilden, Director of Large Accountsbwhilden@cwpowellins.combwhilden@cwpowellins.com | 904| 904--256256--00970097

Brian Sivillo, ARM CIC CRM CWCA, Account ExecutiveBrian Sivillo, ARM CIC CRM CWCA, Account Executivebsivillo@cwpowellins.combsivillo@cwpowellins.com | 904| 904--256256--00950095