Lynch Ryan's weblog about workers' compensation, risk management, business insurance, workplace health & safety, occupational medicine, injured workers, insurance webtools & technology and related topics

January 30, 2005

Weblog roundup: unions, healthcare costs, employment at will & more

Strategic HR Lawyer offers a reminder that as of February 1, employers have annual OSHA posting requirements for job-related injuries that occurred last year.

Phillip Wilson of Laboring Away at the Institute links to a recent BLS report on union membership. Last year, union membership in the private sector fell to less than 8%; in the public sector, it fell to 36.4%, a drop of a percentage point form the prior year. In another post, he discusses possible reasons for the decline. Also of interest is his post on why workers join unions.

Managed Care Matters points to an article in Health Affairs reporting that medical inflation was 7.7 percent in 2003. Joe Paduda notes that this is significantly less than the prior year's 9.3 percent rate, but still higher than the overall rate of inflation. He also notes out that the news for workers comp is less optimistic with a medical trend rate of 12 percent.

Workforce features an excellent article discussing employment at will and terminating employees while preventing lawsuits. Thanks to George's Employment Blawg for the pointer.

Jordan Barab at Confined Space has blogs about the rise in steelworker deaths and injuries and he also has a comprehensive post on the shocking work conditions in the meat and poultry industry, including a link to a recent 100+ page report by Human Rights Watch entitled Blood, Sweat, and Fear, Workers� Rights in U.S. Meat and Poultry Plants.

RawblogXport points us to an article on the health hazards and control measures for lead in the workplace.

Two of our favorite bloggers have speaking engagements this week. On February 1, Judge Robert Vonada is presenting a Workers' Compensation Law Update at Joyner Sportsmedicine Institute in Roaring Spring, Pennsylvania. On February 2, attorney Michael Fitzgibbon will be speaking at the Human Resources Professional Association of Ontario (HRPAO) Annual Conference on Progressive Discipline in the Non-Union Workplace.

Posted by Julie Ferguson at 9:48 AM Link to, Comment (0), or E-mail this post
January 28, 2005

The Smallpox Conundrum

Remember smallpox? At the height of concerns about terrorism following 9/11, the federal government proposed that health care providers and first responders get vaccinated against the disease. The lack of response, as they say, was deafening. Recently there was a privately-funded simulation of a smallpox incident in the news. Headed up by former Secretary of State Madeline Albright, the exercise -- dubbed "Atlantic Storm" -- posed a scenario in which terrorists spread dried smallpox at an airport in Frankfurt, Germany and a number of other locations throughout Europe and the United States. The simulation revealed a number of serious weaknesses in our current planning. As the former Polish Prime Minister, Jerzy Buzek, put it: “Fortunately, we are not prime ministers anymore. Nobody is ready."

Here are a few facts concerning the vaccination for smallpox (for detailed information, see the CDC’s website):
 For the most part, the vaccination is safe: the rate of adverse response to the vaccine is relatively small (1,000 serious reactions for every million vaccinated). However, given the scale of the anticipated inoculations that would be needed if all health care providers needed protection, there is cause for concern. Under rare circumstances the vaccine can lead to death.
 After vaccination, the individual is potentially contagious, for up to three weeks (as long as the vaccination site remains open). This means that health care workers – primary targets for vaccination -- might not be able to work for a significant period of time.
 There is a portion of the general population that is at higher risk for adverse reaction to the vaccine (e.g., people with a history of eczema or acne, HIV positive individuals, burn victims, cancer patients, pregnant women). There are guidelines for screening these individuals out of a vaccination program.

The Public Policy conundrum
The smallpox vaccination program raises a number of issues involving workers compensation and other forms of insurance. In addition, there are some gray areas, where vaccinated workers and their families may face periods of disability that are not covered by insurance. Here is our take on just a few of these issues:

If employers require their employees to be vaccinated, any adverse responses would certainly be covered by workers comp, up to and including death. Even if the vaccination is “voluntary,” adverse reactions are still likely to be covered by workers comp. There is a potential “disproportionate impact” on insurers of health care facilities and ambulance services, whose workers are first in line for vaccination. This exposure is not currently contemplated in workers comp rates.

Regarding the significant portion of the general population that is at higher risk for adverse reaction to the vaccine (see above), many of these vulnerable individuals work in health care facilities, where their not being vaccinated might put them at higher risk for serious illness. If exposed to smallpox, they would be at very high risk when they are compelled to take the vaccine to stave off the illness.

As if the real risks were not enough, the considerable publicity about the dangers of the vaccine significantly increases the probability of “false positives” – people reporting what may be imaginary ailments. These “false positives” would immediately appear on the workers comp radar screen.

Here’s the crux of the problem for the health care industry: inoculated workers might not be allowed to come into contact with patients during their potentially contagious period (up to 21 days). This would apply especially to health care workers whose patients include the highly vulnerable groups mentioned above. This inability to work is not a period of “disability” but of quarantine. Workers comp would not apply. Who replaces the lost wages during this period? Is it fair to require workers to use their sick leave? What if they do not have any sick leave? Beyond that, if there is a mass inoculation of health care workers, how will hospitals staff their facilities during the quarantine period?

As if all the above weren’t enough to worry about, during the contagious period, a worker might infect family members. How would these exposures be covered?

This is not meant as a definitive summary of the smallpox policy issues. However, it is clear that any mass inoculation program will raise a number of concerns that need to be confronted head on, not as we are currently doing, with our heads buried in the sand.

Posted by Jon Coppelman at 11:33 AM Link to, Comment (0), or E-mail this post
January 27, 2005

Really Risky Business

The world of insurance is built upon the concept of risk transfer: instead of taking on the full cost of risk, we buy insurance. For a fraction of the cost of what we might lose, we pay premiums to transfer the (relatively) remote risk to someone else.

But what if the activity involves enormous risk? And what if the people seeking insurance are by definition thrill seekers and lovers of danger? How would you underwrite them?

In an article in the Los Angeles Times (registration required), Charles Duhigg describes the world of Ken Schulteis, President of Global Underwriters, which writes more than 10,000 insurance policies a year for people climbing mountains, racing cars and stepping out of their predictable routines. (They also cover diplomats on assignment and oversees defense contractors -- in today's world, activities at least as dangerous as mountain climbing.)

Global offers rescue insurance to mountain climbers. (And you think you have problems!) This type of insurance raises the classic insurance question: would you want to sell insurance to anyone who thinks they need it? The article quotes Schulteis as saying "The more I learn about people, the more I worry about selling insurance. I always ask myself: Will selling a sane person insurance make them take insane risks?"

Once adventure-seeking climbers have rescue insurance, will they become more reckless, simply because they feel safe? "People start taking small risks," says Schulteis, "figuring rescue is nearby. But gradually those risks become deadly."

To frame the article, Duhigg tells the story of a well-planned climb gone bad, with one climber nearly paralyzed after being hit by a falling rock and the other without a cell phone to call for help. They are eventually rescued -- and Global picks up the tab.

Some people feel more alive when they are at risk. That's why they climb the mountain in the first place. The riskier the climb, the greater the challenge. But how does an underwriter sort out the reasonable risk (the prudent risk-taker) from the reckless? It appears that Global is a profitable company, so they must be making good decisions. In the meantime, as we approach each day with our own little risk assessments that range which shoes to put on in the morning to when to cross the street, it's comforting to know that some people are making risk assessments that dwarf anything that we have to deal with. Better them than us.

Posted by Jon Coppelman at 4:27 PM Link to, Comment (0), or E-mail this post
January 26, 2005

Restaurant Workers in NYC: Bad jobs = Bad risks?

In a fascinating study of restaurant workers in New York City, the Restaurant Opportunities Center of New York presents the results of a survey of over 500 workers and over 30 employers in the industry. There are about 165,000 restaurant jobs in the city, comprising 4.8% of the workforce. The median wage for these workers is $9.11 (meaning, of course, that half make less than that amount!). Fully 90% of the workers receive no health insurance benefits. Most have no paid vacation and no paid sick leave. The majority of the workers are Hispanic and Asian. The jobs are for the most part dead end, with no training and no focus on safety and health.

In addition to long hours, low wages and no benefits, many of these workers are subjected to very difficult working conditions: hot kitchens, slippery floors, aging equipment. Discriminatory practices are rampant. If workers miss time due to illness or family emergencies, they are usually fired. The turnover rate is very high.

Everyone at Risk
As we review this litany of third world conditions for thousands of restaurant workers in New York City -- and then multiply that by similar conditions in major cities throughout the country -- some might well ask, "so what? It's not my problem!" Ah, but it could easily become your problem. Poorly trained workers may not handle your food properly. Workers without health benefits ignore their symptoms and drag themselves to work, day after day, thereby putting the eating public at risk. Lacking sick leave, desperate employees may bring highly contagious problems into the kitchens and serving areas.

The Voice of the Employers
The report includes surveys of employers. They report the difficulty of operating in New York: the high rents, high fixed costs, the high cost of insurance. The uncertain market where they never quite know how many meals will be served. Some would like to pay benefits, but say they cannot afford it. To be sure, the report sites a number of successful restaurants taking the "high road" by paying good wages and benefits to a stable group of employees.

Where's Comp?
In reading the 70 page report, I sought in vain for any reference to workers compensation. The report takes note of frequent workplace injuries -- slips and falls, burns, cuts -- but describes a process where the worker simply treats him or herself, or perhaps goes to the emergency room, where the bill ends up on the hospital's tab. Where's workers compensation? While health insurance, paid sick and vacation time are discretionary, employers must provide workers compensation coverage for all employees. Indeed, you would think that injured workers unable to perform their jobs would quickly latch on to comp, with its 100% health coverage and indemnity benefits. I am puzzled by the absence of any mention of comp benefits. It's a classic conundrum: these "low road" restaurant operators, with their underpaid, low skilled, limited English speaking workforces, are poor comp risks. Comp benefits may be the only benefits on the table for these workers. On the other hand, it appears that workers comp, at least in this particular study, is off the radar screen. Not only is it not abused (as one might expect it to be), it is not even used for routine treatment of minor workplace injuries. I wonder how much these exploited workers know about their basic rights, from minimum wage and overtime to workers compensation.

It's food for thought, even as we sit down in a comfortable booth and wait for someone (what did he say his name was?) to deliver our meal.

Posted by Jon Coppelman at 9:52 AM Link to, Comment (1), or E-mail this post
January 24, 2005

Winter driving safety

We recently talked about winterizing your workplace and the need for care in snow shoveling and heavy lifting, but in the light of the recent blizzards plaguing much of the country, it's a good time to talk about winter driving safety. Of course, here in the Boston area, discussing this topic today is a bit like the proverbial closing of the barn door after the horse has escaped. But it's only January - winter could hold many more surprises.

For good advice on the topic, look to the North - if anyone ought to be experts on winter driving hazards, it should be our Canadian neighbors. The Canada Centre for Occupational Health and Safety has a comprehensive page on winter driving safety, ranging from preparing your vehicle and stocking a winter emergency kit to how to handle a skid and advice in case you are stranded in the snow. The Ontario Ministry of Transportation has specific advice on driving in whiteouts.

Minnesota's Department of Transportation also has good information on managing winter driving hazards, including tips for safe driving near or around snowplows and the hazards of black ice.

Allow extra time today and travel safely!

Posted by Julie Ferguson at 9:04 AM Link to, Comment (0), or E-mail this post
January 21, 2005

Weblog roundup: TRIA, actuarial news, resume fraud & more

The Comp Expert is a new workers comp weblog by Texas Workers Comp Specialist, Cary Duke. He features an excellent update on the Terrorism Risk Insurance Act (TRIA) and a recent report on TRIA by the Congressional Budget Office. TRIA is scheduled to expire this year, and Duke points out that a failure to renew the act would lead to higher workers compensation rates. (More on TRIA) is a weblog and newsfeed about global actuarial news. It looks to be a fairly comprehensive resource for all things actuarial.

George's Employment Blawg offers tips for catching resume fraud. According ro a 2003 survey, about 52% of resumes had some "discrepancies.

Joe Paduda at Managed Care Matters updates us on the impact of the California reforms and discusses hospital cost drivers.

Jordan Barab is scheduled to appear on Air America Radio on Saturday from 6 to 7 pm. Jordan is a former OSHA official, a tireless safety advocate, and author of Confined Space weblog.

Posted by Julie Ferguson at 8:12 AM Link to, Comment (0), or E-mail this post
January 20, 2005

OSHA inspectors suffer effects of beryllium exposure

Chronic beryllium disease (CBD) is an irreversible, debilitating and potentially fatal lung disease that occurs from exposure to beryllium. In 2004, after much foot-dragging, OSHA began monitoring inspectors for exposure to the substance. First results show that at least three workers, or 1.5 percent of the 200 inspectors examined so far, have become sensitized to beryllium.

Occupational Hazards reports on this story and the history of the OSHA beryllium issue, along with comments by Adam Finkel, a former OSHA regional administrator and whistleblower whose actions sparked the eventual testing of workers.

"Finkel filed a whistleblower complaint on the beryllium issue in 2003, charging that he was transferred because he was pushing for beryllium testing that neither the OSHA Administrator at the time, John Henshaw, nor his deputy, Davis Layne, wanted. The agency denied the retaliation claim, and according to the settlement agreement Finkel no longer works in an OSHA program: He now teaches at Princeton University.

Both Layne and Henshaw resigned from OSHA in December. Soon after Layne was charged with overseeing the beryllium program earlier last year, he declared that even though he had been exposed to the hazard he would not be tested for exposure. "I just don't think it's anything that I'm concerned about," he explained at the time."

It's boggling to think that OSHA officials would brush this aside, especially in that beryllium figured so prominently in the Department of Energy's settlement with energy workers which we discussed in September and again in November. Go figure. Not very encouraging from an agency that is supposed to be advocating for the health and safety of the nation's workers. This is a story that bears watching.

More beryllium information:
Beryllium Fact Sheet from ATSDR
OSHA on beryllium
Beryllium: A 'Deadly Alliance'
Chronic Beryllium Disease Sufferers Get Recognition

Posted by Julie Ferguson at 1:22 AM Link to, Comment (0), or E-mail this post
January 17, 2005

Free safety educational materials

Some state workers compensation authorities have very robust educational materials and information on their websites, and from time to time, we will point to tools or resources that we find. Several states have state funds - that is, the state provides insurance to employers, either exclusively or on a competitive basis. One might expect a certain level of depth to the educational materials provided by state funds. Here are a few we've found:

Utah Workers Compensation Fund Safety Topics. More than 60 safety topics, many in both English and Spanish, are available in PDFs.

Ohio Bureau of Workers Compensation Safety Publications. More than 40 guides and manuals are available in PDFs.

Washington State Department of Labor and Industries has a variety of posters and safety guides available in PDFs. The site also offers some employee and employer training guides, including PowerPoint presentations.

Lousiana Workers Compensation Commission Safety Articles. More than 60 archived articles on various safety topics are available online.

A note of caution: workers compensation laws vary state to state, and while many of these materials are general in nature, certain materials may be state-specific.

Posted by Julie Ferguson at 11:12 AM Link to, Comment (0), or E-mail this post
January 13, 2005

Sleepy Docs Revisited

Back on November 15 and 16, we blogged the problem of sleep deprivation for interning doctors and the potential negative impact on the treatment of injured workers. Interns are routinely on call for over 30 consecutive hours. Once beyond about 16 hours, they are more prone to making mistakes. Given that these sleep deprived doctors staff our emergency rooms, which are the first line of defense for injured workers, the potential for harm in the treatment provided to these workers is substantial.

A new article in the New England Journal of Medicine indicates that the danger does not end when the seemingly interminable shift is finally over. Doctors who drive home after working these extended shifts are twice as likely to have accidents. Thus, their sleep deprivation, a product of a medical system that exploits the services of some of our most talented citizens, poses a risk to patients, to these highly trained and valued people themselves, and to the general public.

Liz Kowalczyk, author of a related article in the Boston Globe, quotes Dr. Charles Czeiler, chief of the division of sleep medicine at Brigham and Women's Hospital: "That's akin to letting someone get behind the wheel when you know they're drunk. Yet hospitals are forcing interns to work these shifts."

Some steps have already been taken to reduce the number of hours interns are allowed to work. Nonetheless, extended shifts are still sanctioned by the Accreditation Council for Graduate Medical Education. Sleep deprivation (and low wages) appear to be a "rite of passage" into the ultimately prestigious and lucrative medical field. The working conditions of our young doctors are nothing less than scandalous. There is a powerful correlation between sleep deprivation and poor performance. If we are serious about providing good health care in this country, and if we are serious about providing decent working conditions for our valued medical professsionals-in-training, then we will find a way to put an end to the barbarous "on call" practices of our teaching hospitals.

Posted by Jon Coppelman at 10:41 AM Link to, Comment (0), or E-mail this post
January 12, 2005

Technophiles take note: medical gadgets galore

OK, all you early-adapter occupational docs, case managers, and healthcare professionals - or anyone else with a penchant for technology - here's a fun site to add to your bookmarks: Medgadget is a weblog featuring the latest medical gadgets and technologies. A sampling of recent posts include an AutoPulse resuscitation system, a pill sized thermometer that monitors body temperature and transmits data to a hand-held, and a no-post-office-should-be-without-one anthrax "smoke detector."

And for more on emerging medical technologies, Wired's Med Tech Center usually has some interesting articles. You might also want to visit Engadget and Gizmodo, both fun sites for technophiles who are looking to be more efficient both on the job and off. And if you have a yen to put some of those new tech toys to use in your occupational practice, you might check out some of the news and reviews at or Palmdoc Chronicles.

Posted by Julie Ferguson at 4:34 PM Link to, Comment (0), or E-mail this post
January 11, 2005

Poppy Seeds and Drug Testing: False Positives?

Many employers are aggressively testing job applicants and employees for drug use. According to a brief article in today's New York Times (registration required), it is now scientifically proven that poppy seeds can cause false positives for opiate abuse. Poppy seeds come from the same plant that produces heroin.

Arnahad O'Connor points out that "eating a couple of bagels heavily coated with poppy seeds can result in morphine in a person's system for hours, leading a routine drug test to come back positive." However, the amount of opiates in the bloodstream is far lower than if the individual is abusing pain killers. Indeed, you cannot get high, no matter how many bagels you eat! IN response to the issue of false positives, the federal government recently raised the threshold for opiates in workplace testing, to 2,000 nanograms a milliliter, up from 300. Under the new standard, eating three large poppy seed bagels could push a person over the 300 threshold, but not the 2000.

For a less serious take on this issue, we recommend the amusing summary in Straight Dope. And for the definitive history, check out According to this posting, written by Barbara Mikkelson, the issue began back in 1990, when a police officer was suspended for four months because his drug test showed positive for morphine. He had eaten four (!) poppy seed bagels the day before the urine sample was taken. He was subsequently reinstated with back pay after it was determined that poppy seeds -- not drug use -- had produced those results. (Let's hope the officer received some nutrition counseling!)

Mikkelson also points out that furloughed prisoners from the federal prison system must agree in writing not to eat any products containing poppy seeds while in half-way houses or while on probation. I wonder if this requirement will be eliminated, given the above change in federal drug standards.

The utility and justice of drug testing is well beyond the scope of today's blog. But it is worth noting that a poppy seeded bagel with cream cheese, or a nice slice of poppy seed cake, will no longer put your employment in jeopardy. Happy eating!

Posted by Jon Coppelman at 10:37 AM Link to, Comment (2), or E-mail this post
January 10, 2005

State WC news: RI, HI, CA

Rhode Island: For the first time since 1998, RI workers comp rates will be reduced by 20.2 percent, slightly more than the NCCI recommendation of 18.3 percent, but less than the attorney general's call for a 27.5 percent reduction.

Hawaii: The state Department of Labor and Industrial Relations is proposing regulatory changes for HI workers' comp and hopes to bypass legislative hearings to get these administrative changes enacted. Some of the changes have to do with vocational rehabilitation, specifically in the area of treatment guidelines, and a limit on rehabilitation plan durations. Hawaii's comp costs are high, and there are other changes that will need to be addressed legislatively, such as temporary disability limits and eligibility for physicians of record.

California: a press release from the Division of Workers' Compensation indicates that new CA regulations for Independent Medical Reviews (IMEs) have been approved and physicians are encouraged to apply as medical reviewers.

Posted by Julie Ferguson at 8:03 PM Link to, Comment (0), or E-mail this post
January 9, 2005

Independent Contractors, Revisited

In a January 6, 2005 article in the Wall Street Journal (available to subscribers only -- but accessible at the Teamsters website), Monica Langley outlines the working conditions of "independent contractors" who work for FedEx. They drive their own vehicles, but wear FedEx uniforms and adhere to FedEx policies. Their delivery schedules are sometimes set by FedEx -- especially where commitments have been made to specific pick up and delivery times. FedEx says they are independent, because they can buy and sell their routes and they provide their own equipment, but clearly there is a significant question as to who "controls the work."

As Langley reports, although there is no single formula for measuring control, a worker is likely to be considered an employee "if he or she works set hours, is required to follow instructions on how to do the job, receives training from the employer and works on the employer's premises."

FedEx may well have crossed a line by promising specific pickup or drop-off times to valued customers beyond the service guarantees normally offered by the company. By adhering to these schedules, "independent contractors" may not really be independent. Langley writes that one former driver complained that in his haste to meet the target "he regularly urinated in cups or old bottles in the back of his truck." Yikes! You might want to wear plastic gloves when opening the package!

In California, New Jersey and Montana, courts have determined that Fed Ex's "independent contractors" are in effect employees. These cases are under appeal. Meanwhile, there is a lot of money at stake. Langley writes that in its quarterly report to securities regulators last month, FedEx "disclosed the proceedings over FedEx Ground's "owner-operators" for the first time and warned that they could "result in employment and withholding tax liability for FedEx Ground." It said it couldn't estimate the size of the potential liability."

If the courts do in fact determine that the over 13,000 "independent" drivers are in fact employees, Fed Ex will be required to pay benefits, administer witholding and, most important from our perspective, provide workers' compensation benefits for these people. That would be a lot of payroll and a lot of workers' comp. And it could well be retroactive. I wonder how many independent contractors have been disabled by work-related accidents or injuries in this fast-paced industry. They would surely welcome an opportunity to collect the comp benefits available only to "employees."

We have blogged the intriquing area of "independent contractors" before and we will surely do it again. It's not going away. From our perspective, true independence rightfully requires people to carry their own insurance. Independent contractors, by definition, are not "part of the work team." But this situation appears to involve an area where these contractors waddle like FedEx employee ducks and quack like them, too. If indeed they are "ducks", they deserve all the consideration and benefits of the thousands of people who are currently part of the FedEx team. If, in turn, this becomes a cost of doing business that must be borne by the customers, so be it.

Posted by Jon Coppelman at 11:46 AM Link to, Comment (2), or E-mail this post
January 6, 2005

Trends and issues at the start of a new year

As we embark on the new year, many weblogs and business publications have been recapping 2004 or making predictions for the coming year. Here are a few we've noted.

George's Employment Blawg suggests that a good way for employers to begin the new year is to update the employee handbook and offers some tips for key areas to address.

Rough Notes offers a looks ahead to the insurance market in an article entitled Analysts foresee bottom-line woes for insurers in ’05, seeing higher costs due to the Spitzer investigation and soft market pressures as leading concerns. Other issues of concern include TRIA, reinsurance issues and insurance regulation.

The cost of medical care is now the single biggest segment of workers compensation expenses, representing more than half of every benefit dollar paid. In workers' comp, the issues and trends in the group health market often have an impact on workers comp. Joe Paduda opines on three top trends in health insurance markets and identifies them as: more consolidation among health insurers, the return of the hospital, and cuts in Medicaid and Medicare.

Confined Space reviews the Top Ten Workplace Safety & Health Stories of 2004. Among the stories on his list: the attempted reorganization of NIOSH, John Henshaw's retirement from OSHA and OSHA's overall do-nothing stance, the popcorn lung trial, and asbestos compensation.

Anita Campbell at Small Business Trends has been posting a series on business trends that will impact the small business market in 2005 and beyond. Yesterday's post was the tenth in the series and highlighted e-business trends. It also links to the other 9 trend lists. FC Now also points to several 2005 business trend lists, including workplace and HR issues.

Posted by Julie Ferguson at 9:10 AM Link to, Comment (2), or E-mail this post
January 4, 2005

The Basics of Experience Rating, Part Two: When Do Losses Really Count?

In our previous blog on experience rating, we discussed the disproportionate impact that frequency has on an employer's workers' compensation premiums. The first $5,000 of each claim (primary losses) are counted dollar for dollar in the calculation of the "mod." Losses above $5,000 are discounted substantially. Therefore, a lot of small claims can raise your premiums faster than a single large claim. Once again, for an excellent overview of experience rating, we recommend NCCI's white paper.

When are the numbers actually crunched to determine an employer's premium? Do employers have to obsess about reserves throughout the policy year or is there an optimum time to review losses?

When it comes to determining the experience rating for your next policy year, there is only one day that really counts. About six months after the end of your policy year, a summary of your losses (the unit stat report) is prepared by your insurance carrier(s) and submitted to your rating bureau. For employers with open claims in prior years, it is essential to make sure that the numbers contained in the unit stat report are accurate and reflect an up-to-date understanding of the status of each open claim.

When Should you Look at Losses
So when should an employer review open claims? If your company has more than a half dozen open claims, you should review the losses at least quarterly. Request a loss run from your carrier (your agent can help with this). Go over each open claim with the claim adjuster, to make sure that you have a clear and effective strategy to achieve closure. Ideally, you are working with the adjuster to return the employee to full or modified duty. If, on the other hand, return to work appears unlikely, you should be working toward closure by settling the claim. In the world of insurance, "the only good claim is a closed claim." This quarterly review process ensures that you have an appropriate focus on every open claim.

For employers with just a handful of open claims, quarterly reviews are usually not necessary. At a minimum, request a loss run three months after the end of your policy year. This gives you plenty of time to review the status of each open claim and take action toward resolution. You have fully three months to impact reserves prior to the submission of that all-important unit stat report.

"Aggravated Inequity"
There may be times when a claim is closed after the unit stat report has already been submitted, but still prior to the beginning of the next policy year. If the claim closes at least 25% below the prior reserved level, you are entitled to a recalculation of your experience rating under the "aggravated inequity" rule. This rule, containing a deliciously inexplicable name, applies only if the claim is closed. If the reserves are reduced but the claim remains open, you are not entitled to a recalculation. All of which brings us back to our primary point: make sure you are comfortable with the reserves three months prior to the submission of the unit stat report.

Savvy managers don't have to spend every waking moment worried about reserve levels for open claims. There is that one time of year, however, when a laser-like focus on open claims can be very helpful in controlling losses. Make note of your policy end date, move forward three months, and place a post-in in your calendar to review your loss runs. You will be taking action just ahead of that one crucial moment when reserves really count.

Posted by Jon Coppelman at 12:12 PM Link to, Comment (0), or E-mail this post
January 3, 2005

West Virginia revokes 400 business licenses for defaulted workers compensation premiums

The West Virginia Department of Tax and Revenue, in conjunction with the Workers Compensation Commission (WCC), has revoked the business licenses of 400 employers that owe $2.4 million in workers' comp premiums, interest, and penalties. West Virginia is one of 6 states with an exclusive state fund - in other words, WCC is the sole provider of workers compensation coverage in the state. According to recent news, WCC has more than $3 billion in unfunded liabilities and the idea of privatizing the state fund is under consideration. The unfunded liabilities in the state’s workers comp and pension systems are reported to total more than $10 billion, and are among the most pressing issues facing the state’s new governor, Joe Manchin.

For more background on the state's problems, readers can turn to an extensive series that The State Journal ran last year on the crisis in West Virginia's workers' compensation system. The series includes reportage and editorials from various system participants, as well as some interesting backgrounders, such as a definition of terms such as TTD and PPD and a visual guide of how workers' compensation claims work in W.V. (pdf).

Posted by Julie Ferguson at 10:28 AM Link to, Comment (0), or E-mail this post