RiskSolutions Newsletter Spring 2013

7/28/2019 RiskSolutions Newsletter Spring 2013

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TideTRACKERHelping to Navigate the Troubled Waters of Workers Compensation

Table of Contents

Is OSHA Wrong About Safety Incentive

Programs? ..pg. 2

Fraud Occurs On Many Levels .pg. 3

Crossing the Divide: a Look Inside

Fraud.pg.4

Stipulation Vs. Compromise and Release:

Know Your Settlement .pg. 5

For You Information: What Is Permanent

Disability ..pg. 6

The World of Data Integrity: Useless

Information to Some; a Wealth of

Knowledge to Others .....pg. 7

Breaking News:

Midyear Filing Is

Unlikely to Changeby Ed Taylor

The WCIRB has stated that they

are unlikely to file for a mid-yearincrease in advisory pure premium

rates, according to a recent article on WorkCompCentral. Unfortunately, this will not do much to helpemployers. Over the course of the last two years, ithas become apparent that insurance carriers havebeen steadily increasing their pure premium rates infilings to the insurance department. And theredoesn't appear to be any relief on the horizon.

To give you an idea of how quickly rates are

increasing, take this example: a rate of $2.56 wasadopted by the Insurance Commissioner lastNovember. Since that time, the rate has risen byabout 1.7%. The rating bureau has projected about3% growth in indemnity severity and 5% growth inmedical severity. This results in an overall loss ratioof 79.9% on policies, excepting those between July1, 2013 and December 31, 2013. It also appears thatthe projected expense ratio is higher which results inan allocated loss adjustment expense ratio of 24.3%with a medical cost containment programs

accounting for 7.5% of that increase.

It is highly doubtful that we have seen the trueeffects of SB 863 at this point. The averageindustry-filed rate as of January 1, 2013 was $2.55per hundred dollars of payroll . That's 7.1% higherthan the average of $2.38 from July 1, 2012.

The governing committee met the first week ofApril. It is not anticipated that they will have amidyear filing. However, there are changes that will

benefit employer, such as how the X-Mod is beingcalculated. New limits will be set as to how much anemployer's X-Mod could change as a result of a singleaccident. These changes will be presented in June 2013.

RiskSolutions is dedicated to keeping you abreast ofchanges that will affect your bottom line. Look forfurther news on the X-Mod changes in our nextnewsletter.

Ed Taylor, CEO and one of the founders of RiskSolutionsInc. has more than 35 years of experience in the risk

management field. He brings a passion for safety and

employer service to RiskSolutions. His goal is to provide a

safe workplace for workers and to educate employers and

brokers. The company name expresses Eds commitment to

the industry of which he is a part. As the captain, Ed directs

an outstanding crew who will gladly plot the safest course

through the treacherous waters of the Workers

Compensation system.


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Is OSHA Wrong About Safety

Incentive Programs?

by Joe Stevens

Recently, OSHA issued abulletin discouraging employersfrom using safety incentiveprograms, based on the premisethat injuries could go unreporteddue to peer pressure fromworkers who want to winawards. Sounds reasonable, butI wonder if OSHA isnt missing the big picture.

Lets start by examining the downside of incentives, aslaid out in the OSHA argument.

OSHA presumes that workers are easily dissuaded fromreporting legitimate injuries. OSHA shouldacknowledge that hidden injuries are almost always ofthe minor variety, since getting treatment for a majorinjury outweighs any other considerations. A seriouslyinjured workers primary concern is always gettingtreatment.

The second OSHA argument is that rewardingdepartments who perform safely is discriminatoryagainst those departments with injuries. Really? Sincewhen is it discriminatory to reward good performance?Should all salesmen earn the same commission so as notto discriminate against those who sell less? Shouldsuccessful managers be denied raises because thatdiscriminates against managers who do not performwell? There is a significant difference betweenrewarding excellence, and discrimination against

everyone who did not perform to that level. There is aword for this kind of approach, but well leave that foranother discussion.

Lets compare OSHAs attempts to discourage the useof incentive programs with the potential benefits.

The purpose of a good plan is to raise awareness of safebehavior, provide encouragement and motivation toperform jobs safely, and convey how important the

workers individual safety is to the companyEverything an organization does to increase theawareness and importance of safety pays off, both for

the individual workers as well as the company. Whenan organization shows that they care about safety- thatit is their highest priority- workers take it moreseriously.

Our recommendation for a safety incentive program isto make it dynamic-not static. No bingo or scratch cardsand no monthly reward added to the paycheck. Noentitlements, in other words. Safety awards meetingsthat are attended by managers who congratulate andthank winning teams and individuals for being safe, thatprovide recognition and show appreciation, arewonderfully effective. Acknowledgement of a job weldone goes a long way to providing encouragement andmotivation to keep up the good work. Incentives andrewards are an important piece of these programs, butwhen recognition is given, they are not the focal point.Dynamic meetings send a clear message on how


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important safety is. Simply telling workers to be safe,no matter how sincere, is not enough. Every employ-er says that. On the other hand, demonstrating how

important it is takes safety to a higher priority leveland that is the basis for greater awareness.

My biggest objection to OSHAs recommendation isthis: OSHA completely ignores the benefits of injuriesthat dont occur! An effective incentive program thatincreases awareness and raises the priority level ofsafety always leads to fewer injuries, yet OSHAoverlooks this benefit. If their premise was true, anda minor injury did go unreported, how does thatcompare to ten other injuries that never happened dueto greater awareness?

The goal of any organization should be to strengthenthe safety culture and raising the priority level ofsafety, through the use of dynamic safety recognitionand rewards program, is one of the most effectiveways of accomplishing that.

Joe Stevens founded Bridge Safety Consultants in

2003 to provide companies and organizations with aresource to help them strengthen their safety culture.

The company conducts a safety culture audit, thendesigns and manages safety recognition and rewards

program, with bilingual monthly safety meetings. Mr.

Stevens can be contacted at:[email protected]. To see a typical

meeting in action, visit their website:

www.bridgesafetyconsultants.com.

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Fraud Occurs On Many Levelsby Linda Taylor

There was big news recently inWork Comp Central. It wasreported that federal officialsserved search warrants toPacific Hospital of Long Beachand Industrial PharmacyManagement in Newport BeachCalifornia as part of an ongoingfraud investigation. If trends continue the way theyhave, this could be happening more and more.

Throughout my many years in WorkersCompensation, there has been a great deal of discussionabout employee-level fraud. Unfortunately, that is onlythe tip of the iceberg. The modern world of WorkersComp is filled with threats. We are seeing theemergence of practices like 'capping' in whichemployees are approached at the unemployment officeand encouraged to file Workers' Compensation claimsagainst their previous employers. Time and again, wesee medical providers prescribing excessive andunwarranted treatment, medications, and time off toWorkers' Comp patients. This results in millions ofdollars in unnecessary costs to employers in the state ofCalifornia. In the case of Pacific Hospital, it wasreported that the facility billed $533 million for spinafusions performed between 2001 and 2010. What wedon't know, and what the federal officials won't say, iswhat percentage of those charges are suspected to befraudulent. If one medical provider could cause suchan uproar over their billing practices, imagine whatcould be happening across the whole of the state.

We all know the usual suspects that account for largemedical costs in our claims on a daily basis. But wemust be wary of the more subtle offenders. Our bilreview practices must be updated and the softwaremust be designed to identify fraudulent billingpractices. We cannot simply be "business as usual."That bit extra could ultimately save so much.

RiskSolutions was founded to provide brokers andemployers with the ability to assist their insurancecarriers and TPAs in monitoring fraudulent activitiesregardless of the parties involved. We will continuethat pursuit, always seeking ways to improve andrefine, on behalf of the employers of California.Linda Taylor, CSIA, WCCP, RN, CE, COO and co-ownerof RiskSolutions, has more than 30 years in the Workers

Compensation and risk management fields. She combines

claim knowledge with medical knowledge to complete the

picture for total claims management. Her goal is to provide

the best outcome possible for the employer, injured worker

and other stakeholders that struggle with a very complex

system. Her experience, vision and insight drives a holistic

approach to claims management that empowers employers

to create their own safe harbor during these stormy times

in Workers Compensation.


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Crossing the Divide: a Look

Inside Fraudby James Carey

Where does your mind gowhen you hear the wordfraud? Do youimmediately think about aguy, out working someother job after supposedlybeing unable to work? Orhow about someone fakinga slip and fall at the grocerystore? These are clearexamples of fraud, but more often than naught, thecases we think are fraud are in fact an abuse of thesystem that does not amount to criminal activity.

Why make such a distinction? Fraud is an intentionalact aimed at gaining benefits that would not otherwisebe due or, conversely, mis-classifying employees toobtain a lower premium rate. It is incredibly difficult toprove and it has four specific criteria that must be metbefore it can even be considered a criminal case. Thebest way to remember these criteria is with the acronymMILK Materiality, Intent, Lie & Knowledge. Simplybecause an injured worker has hired an attorney or isstill off work when a seemingly reasonable recoverytime has elapsed, it is not sufficient cause to file a fraudcase.

First off, materiality is easy to prove because it speaksto what benefit(s) were gained as a result of the fraud.This could be medical treatment, indemnity benefits, areduction in premium or artificially lowering the

experience modification by failing to report claims. Noone is immune from prosecution and my experience hasbeen that it is a lot easier to prove a premium fraud casethan it is to prove a benefits fraud case.

As for intent, this is tougher to prove because there hasto be some sort of motivation behind the act and theremust be a goal. When documenting a fraud referral, thiswould be something as simple as a claimant wantingextra time off work, avoiding paying excess premium or

obtaining benefits that arent due (e.g. obtaining statedisability benefits while receiving temporary disabilitypayments).

Next is the lie. What did the offending party say or doto obtain this material benefit? Did the claimant applyfor state disability benefits and sign a document statinghe or she did not have a pending claim? Or perhaps saythat they were incapable of working to a doctor andwere later found to be working? As with the precedingconditions, one or two of these criteria is insufficientThe key is getting all four and being able to tell a storyto the jury.

Finally, addressing knowledge of the lie. Did theoffending party know that the lie would secure benefits?Much like the Miranda warnings we see on TV, thisgoes directly to Fifth Amendment rights and in order tomake a fraud case stick is to ensure knowledge of thecrime. Most insurance companies send out letters oradvisements on the checks stating that cashing thecheck while employed or receiving benefits fromanother source is fraud secures the knowledge aspect.

In order to cook up a good fraud case, all ingredients

must be present. Without all of them, there is onlyabuse and just a hope that someday it might turn into afull blown fraud case. But dont give up hopePersistence and provision of additional evidence areabsolute necessities.

James Carey, CSIA, WCCP is a graduate of the Universityof California, Irvine and a veteran claims adjuster with

more than a decade of experience. He has handled claims

at insurance companies, third party administrators and

government entities with strong experience handling highly

complicated cases across multiple states and jurisdictions.

He brings an aggressive, employer-oriented style to the ta-ble along with practical knowledge to help employers navi-

gate the treacherous waters of the Workers Compensation

system.

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Stipulation Vs. Compromise

and Release : Know Your

Settlementsby Lisa Sanchez

Most everyone- employers,defense teams, even theinjured worker- wants to seea claim settled as quickly andpainlessly as possible. To dothis, it is essential that themake the "right" settlement.

There are several factors thatneed to be considered whendeciding which type of settlement would be in the bestinterest of all parties.

The two types of settlements are the Stipulation withRequest for Award settlement and the Compromiseand Release settlement. In a Stipulation with Requestfor Award settlement, all parties agree to the terms ofthe settlement and the amount to be awarded ascompensation. These settlements are ideal for

individuals who remain employed by the company andwhose insurance carrier has not changed. Most casesthat settle by way of Stipulation with Request forAward include a Future Medical Care award andPermanent Disability benefits that are paid over aperiod of time. The claim will remain open for theinjured worker to utilize his or her future medical careand to receive Permanent Disability benefits every twoweeks. The Workers Compensation insurance carriercontinues to hold responsibility for paying any type ofmedical care under the future medical care provision.

A judge will need to review the settlement foradequacy and approve it. If one is in doubt aboutwhether this is the type of settlement for them, it is bestto consider the amount of exposure on the claim. If itis a life pension claim, then it is probably best to settleby way of a Stipulation.

A Compromise and Release settlement, or C&R, is atype of settlement in which the injured worker receivesa lump sum payment which buys out any benefits thatcontinue to be owed to them such as Permanent

Disability benefits, future medical care and theSupplemental Job Displacement Voucher. Thesettlement value is based upon the level of permanent

disability indicated in the medical reports, the value ofthe Supplemental Job Displacement Voucher and anestimated value of future medical care. Benefits arepaid out in a lump sum rather than paid out over aperiod of weeks. This type of settlement resolves theremaining exposure on the claim. It is the mostcommon with litigated claims. The employer and theinsurance company are relieved from future liabilitywith a Compromise and Release settlement. If a claimsettles by way of Compromise and Release, the injuredworker would then be responsible for paying their ownfuture medical care treatment. A judge must approve inorder for the settlement to be finalized. The claim canclose when the final settlement amount is paid.

As the injured worker's employment status is so integralto the settlement process, the employer shouldcommunicate to the insurance carrier any time there isa change in that status. For example, say an injuredworker settled his claim by way of Stipulation withRequest for Award and he later quits or is terminated bythe employer. The Workers Compensation insurancecarrier should attempt to settle the claim by way of aCompromise and Release to buy out the remainingexposure on the claim.

Reaching the settlement process can feel like the homestretch toward resolving a claim. With the right kindsettlement and a fair offer, all one needs if a reasonableclaimant and a little luck to see even the mostcomplicated claim safely home.

Lisa Sanchez, CSIA, WCCP is a graduate of the University

of California, Riverside and has a Bachelors degree inBusiness Administration. She is a seasoned bilingual claims

adjuster with more than eight years experience, having

handled claims at a self-insured, self-administered employer

before being drafted to the RiskSolutions team. She brings a

unique, employer-driven perspective with her and hands on

experience working one-on-one with management and

injured workers alike helps employers to fathom the endless

depths of Californias Workers Compensation system.


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For Your Information: What isPermanent Disability

by Melissa Rehm

The world of Workers'Compensation can be a trickyone to navigate. One of thethings I'm most frequentlyasked about by employers isPermanent Disability. Thisbenefit can have a dramaticaffect on the life of a claim andan insured's X-Mod rating. The

new year saw many changes tothe Permanent Disability rating and payment process.Such an important factor in the Workers' Compensationprocess is due some clarification.

Permanent Disability (PD) is evaluated only after thetreating physician decides the injury or illness hasstabilized and no change is expected. At that time, thecondition has become Permanent and Stationary (P&S)and the claimant has reached Maximum MedicalImprovement (MMI). If the injury or illness results in a

permanent impairment, the claimant is entitled to PDbenefits even if the claimant can work his or her usualand customary position.

Once a claim is deemed P&S, the treating physician willidentify the amount of Permanent Disability theclaimant has in the final report. The physician will alsodetermine whether any part of the disability was caused

by something other than the claimant's work dutiessuch as a previous injury or pre-existing condition. Thisis called apportionment.

The physician will include in the final report animpairment number. The Permanent Disability RatingSchedule provides the formula to calculate thepercentage of disability from that number. Theclaimant's occupation and age at the time of the injuryare valued and used to calculate a final PD rating. Herewe see our first major change. Effective January 12013 the Diminished Future Earning Capacity (FEC)was removed from the rating process. After a rating hasbeen determined, any apportionment that was found issubtracted from the final number. The disability wil

then be stated as a percentage. The percentage ofdisability corresponds to a specific dollar amountdepending on the date of the injury and the averageweekly wages at the time of injury. A rating specialisfrom the Disability Evaluation Unit (DEU) may beconsulted to help calculate the rating.

Some significant changes have been made to theamount an employer pays in PD, provided they have 50or more employees. For injuries before 2013, theamount will be affected by whether or not the employer

makes a suitable return-to-work offer. If an offer ismade for the claimant to return to regular or modifiedduty for a period of at least 12 months, whether or notthe offer is accepted, the weekly rate will be reduced by15%. If the employer is unable to return the employeeto regular or modified duty, the PD rate is increased by15% 60 days after the claim becomes P&S. As oJanuary 1, 2013, however, all Permanent Disabilityratings will be increased by a Whole Person Impairmentfactor of 1.4.

For injuries prior to January 1, 2013, PD benefits mustbegin paying within 14 days of Temporary TotaDisability benefits coming to an end. If no time wasmissed at work, PD payments are due from the date thetreating physician deems the claim P&S. PD benefitscontinue to be paid every two weeks until a reasonableestimate of the disability amount has been paid. Whenthe actual amount of PD due has been determined, anyamount over the original estimate must be paid.


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For injuries after January 1, 2013, PD payments arenot due if the claimant returns to modified,alternative or regular work with the original

employer at 85% of his or her original wages orreturn to work for any employer at 100% of wages.An adjusted payment begins with the last dateTemporary Disability was paid or when P&S is de-clared- whichever is earlier.

Permanent Disability can be a tricky path to travel.Its effects can be drastic and long-ranging. Ifcarefully monitored and appropriately litigated,Permanent Disability does not need to disable anemployer's finances. A good map and an eye on theroad will ensure a successful journey.

Melissa Rehm, CSIA, WCCP is the manager and backboneof RiskSolutions Claims Oversight department. With aflair for customer service and experience in the forestry,hospitality, healthcare, manufacturing and automotiveindustries, she brings practical knowledge and uses it todevelop innovative solutions for the clientele ofRiskSolutions. With her experience and tenacity, she helps

employers anchor their costs and keep their X-Mods afloatamidst the murky depths of the California WorkersCompensation system.

The World of Data Integrity:Useless Information to Some; a

Wealth of Knowledge to Others

by Vanessa Mikulich

"Eight, Bob. So that means that when I make amistake, I have eight different people coming by totell me about it. That's my only real motivation is notto be hassled. That and the fear of losing my job. But

you know, Bob, that will only make someone workjust hard enough not to get fired.

While this quote from the movie Office Space mocksthe banality of office work and give us a good laugh,it also demonstrates how data integrity can bemaintained and managed. Do we really need eightpeople checking on one set of information? No-

unless you have one-eyed chimpanzees doing your dataBut you do need a system of checks and balances.

What does data integrity mean? According to thedictionary it means ensuring the accuracy andconsistency of stored data, indicated by an absence of anyalterationin data between two updates of a data recordGot that? I am sure you are as thrilled by that definitionas I was reading it. But seriously, data integrity isintegral to our day-to-day operations at RiskSolutions. Ithelps us maintain the consistency and accuracy of theinformation we receive so that the information weprovide to our clients is current and relevant to managingyour claims.

At RiskSolutions, we have a department dedicated to dataintegrity. They input the information we receive fromloss runs, adjuster updates and client communications, toestablish a snapshot of every claim we are managing withour customized software suite, CompTracker. Thisdepartment ensures that insurance carriers are identifiedcorrectly, loss data is appropriately maintained andreports are scheduled timely. We conduct routine auditsand quality assurance checks to ensure the data we havecan be leveraged in a meaningful way.

Our clients see the results of data integrity when we areable to provide feedback and intelligence about insurancecarriers and claims administrators, track trends in claimsmanagement and ultimately leverage this informationinnovatively to provide an edge for your business.

Now about those TPS reports

Vanessa Mikulich is a graduate of the University ofCalifornia, Irvine and holds a degree in Psychology & SociaBehavior. Vanessa comes from a background in the menta

health field, most recently as a social worker with an emphasisin psychosocial intervention and motivational interviewingworking with dual-diagnosed patients. She is presently a boardmember with a local 501(c)(3) non-profit charity. As the dataanalyst for RiskSolutions, she has been instrumental inresearching & developing new products, compiling statisticadata and maintaining data integrity within RiskSolutionsdatabase environments.

(951) 943-6775 ext 151Fax: (951) 943-5221

[email protected]

P .O. Box 18017602 17th St.

T ustin, CA 92780

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RiskSolutions Newsletter Spring 2013