Demystifying Workers Compensation November 19, 2014 Presented by: - - PowerPoint PPT Presentation

Demystifying Workers’ Compensation

November 19, 2014

Presented by:

Shari Deutsch, ARM-P Safety & Risk Management Administrator Central Contra Costa Sanitary District

Who Are You?

 HR Staff?  Supervisor or Manager?  Regular Employee?

What’s Your Role in WC?

Why Are You Here?

 I’m just curious  I’m new to Workers’ Comp  I need a refresher  I have specific problems or questions and

I’d like some answers

 Something else?

How Does Your Agency Manage WC?

 Self-Administered or through a Third

Party Administrator (TPA)?

 Fully insured, self-insured, or blended?  Do you have an In-House

Workers’ Comp Coordinator?

Things to Consider

 I can’t give you legal advice, just practical

advice.

 For supervisors and HR folks, who do you

work for; the employee or the employer?

 The rules change often

• SB 899 in 2004, SB 863 in 2013
• WCAB and Appellate Court decisions

What We Will Cover

 A Broad Overview of WC

• Benefits
• Handling and Settling Claims
• Controlling Costs

 Easy ways to evaluate your WC program  Issues and complications for WC program

management

WC is the Center of the Universe

What’s Workers’ Comp?

• WC was established and is governed by the CA Labor Code
• Claims settlement overseen by WCAB (DIR)
• Insurance oversight by Dept. of Insurance
• We aren’t discussing Federal programs or law
• No Fault Standard – Benefits employees
• Employees do not need to prove that the employer

was negligent.

• Exclusive Remedy – Benefits employers
• Employees lose the right to sue employer for

damages in other venues (civil litigation etc.).

Injuries

Three Types of Compensable Injuries:

• Specific Injury – a single event that results in a physical
• r mental condition
• Trip/Fall
• Car Accident
• Occupational Disease
• Work-related exposure to asbestos, carcinogens
• Result of work environment (i. e. hepatitis)
• Cumulative Injuries
• Hearing loss over time
• Back pain from repetitive bending
• Carpal Tunnel, other RSIs

What’s Not Covered Under WC?

• Injuries resulting from intoxication;
• Intentionally self-inflicted injuries or

willful suicide;

• Injuries occurring to an initial physical

aggressor (person who starts a fight);

• Injuries occurring during voluntary

recreational activity (what about on- site?);

What’s Not Covered Under WC?

• Injuries sustained while committing a

felony;

• Injuries sustained while commuting (the

Going and Coming Rule);

• Psychiatric injuries not “substantially”

caused by work;

• Psychiatric injuries resulting from a good

faith personnel action.

Workers’ Comp Benefits

• Medical Treatment
• Temporary Disability (Total and Partial)
• Permanent Disability (Total and Partial)
• Supplemental Job Displacement Voucher

(after 1/1/04)

• Dependent Benefits (death)

NOTE: Salary Continuation is not a state-mandated

• benefit. If offered by the employer, payments are

considered income and are TAXABLE.

Benefits: Medical Treatment

• Employees are entitle to receive medical

treatment reasonably required to cure or relieve the effects of the injury.

• “Reasonable” treatment is determined by

Utilization Review (SB 899 - 2004).

• Treatment includes medical appointments,

surgery, follow up care (i. e. physical therapy), prescriptions, medical devices (i. e. knee brace, crutches) etc.

Benefits: Medical Treatment

Where does your injured employee go?

• On-site Clinic or Health Services
• Employer’s Medical Provider Network

(MPN)

• Employer’s Designated Occupational Clinic
• Employee’s Pre-designated Physician
• Emergency Room
• Other?

Benefits: Medical Treatment

If the Employer has an MPN:

• Employee has to see a physician within

the Network

• Employee must seek second AND third
• pinions from physicians within the

Network

• After three tries, employee can request

an independent medical review

Benefits: Medical Treatment

MPNs after SB 863 (1/1/13)

 Employer’s failure to provide an employee with

notice of the MPN or notice of the employee’s right to change doctors does not allow the employee to treat outside of MPN anymore.

 If employee impermissibly treats outside of

MPN, the employer is not liable for treatment provided OR any consequences of that treatment.

Benefits: Medical Treatment

If the Employer does NOT have an MPN:

• Employer has the right to control medical

treatment for the first 30 days if treatment is

• ffered on a timely basis.
• If the employer does not offer treatment on a

timely basis, employee can seek treatment from provider of their choice and the employer has to pay for it.

• Best way to offer timely treatment: designate an
• ccupational clinic to treat all work-related injuries.

Benefits: Medical Treatment

Pre-designation of Physician

• Employee must provide written notice to

Employer before an injury occurs.

• Doctor must be a someone who has treated the

employee before the injury (i. e. primary doctor).

• Doctor must have employee’s medical records and

medical history in his/her office.

• You can still send employee to your clinic first.
• NEW: As of 1/1/13, the employee must have

health insurance for non-occupational injuries or illnesses.

Benefits: T emporary Disability

• TD is only payable after an employee has

been off work beyond the 72 hour waiting period.

• TD is available for up to 104 weeks for up to 5

years from the date of injury (DOI).

• After 5 years from DOI, no TD is due, no

matter how much was used.

Benefits: T emporary Disability

• TD is calculated as 2/3 of the injured

employee’s average weekly wage up to a maximum of $1,074.64 per week (as of November 2014).

• TD is not taxable (but salary continuation

benefits ARE).

• Two Types: Temporary Total Disability (TTD)

and Temporary Partial Disability (TPD)

Benefits: T emporary Disability

Employee makes $50 per hour

Average Weekly Wage (AWW) is $50 x 40 hrs.

$2,000.00 Assume 30% taxes withheld

Take home is $2,000 x .7

$1,400.00 Assume TD is payable for 1 week

AWW exceeds Max so Max applies

$1,074.64 Net effect of being off work for one week: ($325.36) Assuming a 30% tax withholding, the break-even point is: $26.86 after tax hourly rate or $34.93 pre-tax hourly rate $1,074.64/40 or $1,074.64x 1.3/40

Benefits: T emporary Disability

Temporary Partial Disability

• Employee can do some work while recovering

but earns less than before the injury (i.e. works less than full time).

• TPD (also called wage loss benefits) pays the

difference up to the maximum weekly amount.

Benefits: Permanent Disability

Per SB 863 (eff. 1/1/13)

 Increased the maximum and minimum

Weekly Rates.

 Calculations are based on level of

impairment, life expectancy and a host of

• ther considerations

 The method used to calculate PD changes

with every piece of WC reform legislation

Benefits: SJDV after 1/1/13

 Supplemental Job Displacement Voucher  Worth $6,000 (not tiered by scope of injury)  Cannot be settled via Compromise & Release  Expires after 2 years after issue or 5 years after

DOI

 Includes $1,000 for computer, $500 for misc. (?)  Applies after:

• Employee found P&S and
• Employee has some level of PD and
• Employer does not provide a qualified RTW offer

Benefits: Dependent Benefits

 Amount determined by date of injury,

level of dependency, number of dependents.

 Death must occur within 240 weeks of

the date of injury (roughly 4.6 years).

Handling WC Claims

 How It Should Work  What Goes Wrong  Mistakes to Avoid

Handling Claims: How it Should Work

 Injury occurs

• Employee receives medical treatment
• Employee receives DWC-1 and NOPE within 24 hours

Handling Claims: How it Should Work

 Doctor gives/prescribes Rx medications,

provides restrictions or takes the Employee off work

• If none of these occur, it is a First Aid case, not WC

 Employee returns claim form (DWC-1)  Employer reports the claim to TPA

• Submitted via form 5020, Employers’ Report of

Occupational Illness or Injury

Handling Claims: How it Should Work

 Claim is investigated and is either accepted,

delayed or denied

• Employer (and its agent) has the right to investigate

all claims for WC benefits

• Most common type of investigation is called AOE/COE
• Notice of Delayed Claim must be issued within 14

days of when employer first knew of the injury or the claim is presumed to be accepted

• Notice of Denied Claim must be issued within 90 days
• r the claim is presumed accepted

Handling Claims: How it Should Work

 Employee receives benefits as appropriate  Employee continues treatment until fully

recovered or found P&S

 If Employee fully recovers, the claim closes  Otherwise, the claim stays open until it can be

closed via Stipulation or C&R

Handling Claims: What Normally Goes Wrong

 Employee doesn’t report the injury immediately  Doctor’s restrictions are vague or indecipherable  Employee fails to provide Employer with a work

status report after a medical appointment

 Doctor treatment approvals are delayed when UR

requires supplemental information

Handling Claims: What Normally Goes Wrong

 The injury is worse than anticipation or

recovery takes longer than expected

 UR denies treatment that the employee or

doctor wants

 Employee’s supervisor doesn’t want the

Employee to return to work (yet)

 Other Things?

Handling Claims: Mistakes

 Employer ignores the report of injury  Employer fails to provide timely medical

treatment

 Employer fails to forward claim form or

invoices to TPA

 Employer fails to investigate or report

relevant findings to TPA

 Employer fails to provide, or provides

inaccurate, info to TPA

Handling Claims: Mistakes

 Employer routinely denies TMD

• Certain exceptions are OK

 Employer fails to control receipt and

distribution of medical records/info

 Employer fails to maintain confidentiality of

medical and personnel information

 Employer fails to correct known safety hazards  Employer fails to train Employees on hazards or

safety procedures

Settling Claims:

 Stipulation with Award for Future Medical

Benefits

• WCAB looks out for the unrepresented
• Claim stays ‘open’ indefinitely to reserve for

future medical expenses

• No Medicare ramifications

Settling Claims:

 Compromise and Release (C&R)

• Claims can be closed – for real
• Ideal for retiring or former Employees
• May be subject to Medicare Set Asides

Controlling Costs

Things You Can’t Control:

• Legislative Changes
• SB 899, SB 863, SCHIP
• WCAB, Appellate Court Rulings
• Insurer Loss Ratio or Bankruptcy
• Pool Experience or Excess Rate Increases
• Changes to Fee Schedules
• Overall cost of medical care

Controlling Costs

Things Over Which You Have Some Control:

• Type of Insurance (guaranteed cost vs. loss

sensitive plans), risk pools

• Your own Experience Modifier
• Safety Program / Ergonomics / Loss

Prevention Efforts

• MPN/Clinic Protocols and Performance

Reviews

Controlling Costs

Things You Can Control

• Return to Work / Temp. Modified Duty
• Medical Management
• MPN options
• UR Triggers
• Bill Review
• Nurse Case Managers

Controlling Costs

More Things You Can Control:

• Regulatory Compliance
• Good Working Relationship w/TPA, insurer
• Follow up on Accident Investigations
• Cost Allocation within your Agency
• Loss History Analysis / ExMod
• Near Miss Reporting
• Active Involvement in Claims Process
• Quarterly meetings with TPA
• Periodic meetings with or reports to depts.

Controlling Costs

 What Happens When

Attorneys Get Involved?

Controlling Costs

Biggest Bang for the Buck:

 Pay attention to your injured workers, their

treatment, their work status and their needs.

 If you are rude or dismissive, you fail to explain

the process or make things too complicated, or you treat injured employees like fools or cheaters, the cost of your claims WILL increase.

Easy WC Program Evaluation

 Relevant Data that’s easy to get:

 Claim Type: Medical Only vs. Indemnity, Strain/Sprain, Abrasion, Fracture  Claim Causes  Claim Costs: Paid vs. Reserved (CMIS)

 Easy Metrics:

• Compare Medical Only to Indemnity Claims
• Average cost by claim type
• Most frequent types of injury
• Compare frequency and severity of claims
• ExMod over time

Medical Only vs. Indemnity

$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 ADM CSO ENG POD

Average Incurred Cost per Claim

Last 7 Years Combined

Medical Only Indemnity

Most Frequent Types of Injury

2 4 6 8 10 12 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Most Common Injury Types

Cut/Bruise Pain Strain/Sprain

Claims Frequency

1 2 3 4 5 6 7 8 9 10 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

• Med. Only Claims Frequency by Dept.

ADM CSO ENG POD

Claims Severity

$0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Indemnity Claims Severity by Dept.

ADM CSO ENG POD

ExMod Over Time

WC Issues and Complications

 Penalties  FEHA Violation Claims  Personnel Problems  Fraud  Attorneys  Doctors  Disasters  PEPRA

Penalties: Serious & Willful Misconduct

 If proven, Employer must pay employee

supplemental benefit of 50% of compensation AND medical benefits payable.

 This is a penalty against the Employer so

insurer/pool cannot cover this.

Penalties: Serious & Willful Misconduct

 Employee must prove either that:

• The injury resulted from a violation of a safety
• rder designed to prevent this type of injury,

that the employer knew about the safety

• rder and knew of the violation

OR

• Employer knew that a substantial risk of harm

existed and took no steps to prevent the harm

• r to correct the defective condition.

Should you install guard rails on a roof?

Penalties: Discrimination

Employer cannot discriminate against an employee for making a WC claim. If proven, employee is entitled to reinstatement with lost wages and benefits back to the date of discriminatory act plus a 50% penalty up to $10,000. Since it’s a penalty, it cannot be covered by insurance.

Labor Code Section 132 (a)

(1) Any employer who discharges, or threatens to discharge, or in any manner discriminates against any employee because he or she has filed or made known his or her intention to file a claim for compensation with his or her employer or an application for adjudication, or because the employee has received a rating, award, or settlement, is guilty of a misdemeanor and the employee’s compensation shall be increased by one-half, but in no event more than ten thousand dollars ($10,000), together with costs and expenses not in excess of two hundred fifty dollars ($250). Any such employee shall also be entitled to reinstatement and reimbursement for lost wages and work benefits caused by the acts of the employer.

FEHA Violations

 FEHA requires the Interactive Process for

all disabilities.

 FEHA does not exclude ‘temporary’

disabilities (like WC injuries, recovery).

 Courts have found Employers in violation

• f FEHA if they failed to engage in the

interactive process for WC injuries.

Personnel Issues

 Performance Problems

• WC claim follows a poor performance evaluation
• WC claim follows a disciplinary or good faith personnel action

 Workgroup/Supervisor Relations

• Boss is capricious, treats people inconsistently
• Employee doesn’t get along with coworkers

 Morale – other employees

• S/he is faking it or it’s not even work-related
• We’re expected to do unsafe things
• S/he is just avoiding the hard tasks

WC Fraud: Red Flags

 These warrant further investigation. The

more of these you have, the more likely that you have a problem.

• Employee is a new hire
• Employee took excessive time off before DOI
• Injury occurs prior to strike, layoff etc.
• Injury relates to an Employee’s pre-existing or non-
• ccupational condition
• Employee and witness statements are inconsistent

WC Fraud: Red Flags

• There are no witnesses
• Employee fails to report injury in a timely manner
• Injuries are all subjective (soft-tissue, pain)
• Co-workers say the injury is not legitimate
• Employee refuses to submit to diagnostic tests
• Medical treatment inconsistent with alleged injury
• Employee does not comply with doctor’s

recommendations

WC Fraud

 Does not absolve you of obligation to

investigate for AOE/COE

 Employer can delay a claim up to 90 days

but still has to provide medical treatment up to $10,000

 Sub Rosa Investigation  District Attorney WC Fraud Unit

Attorneys

 Not all WC cases are litigated.  Most common where claims are frequent,

benefits are generous, or agency suffers from an ‘us and them’ mentality.

 Medical/Legal process complicates things

exponentially:

• Tx appeals, 2nd, 3rd opinions, add-on claims,
• Restricts your ability to talk to the employee
• The attorney has to get paid

Doctors

 The doctor’s job is to treat the employee,

not to save or spend your money.

 Doctors will defer to the employee’s account of

events unless you provide additional information.

 2010 Study: Less than 4% of treating physicians

accounted for more than 72% of WC costs.

 More than half of those high-cost doctors were

in the pain management business.

Doctors

 Implement ways to control doctor

shopping.

• Establish and update treatment protocols
• Meet periodically with clinic administrator
• Decide how to handle First Aid cases
• Actively use all medical treatment cost control

tools

 Send employee to your clinic for FFD or

FCE evaluation (check MOU).

Disasters

 ‘Disaster Service Workers’ are defined in Labor

Code Section 3101 as:

all public employees and all volunteers in any disaster council

• r emergency organization accredited by the Office of

Emergency Services. The term “public employees” includes all persons employed by the state or any county, city, city and county, state agency or public district, excluding aliens legally employed.

Disasters

 You are obligated to provide WC to all DSWs as

long as they are registered by a ‘Disaster Council’ and were injured while working under the general direction of that council.

 ‘Disaster Council’ means a public agency

empowered to direct the activities of disaster service workers.

Disasters

 DSWs include your regular employees who

report for work in a disaster, volunteers, and any other public employees who arrive because they cannot report to their regular agency (unless they are part of a mutual aid request).

 Mutual Aid: Hiring agency is responsible for the

WC coverage of its own employees when they are responding in another jurisdiction.

Disasters

 If not registered DSWs, your WC coverage might

not respond, but you are still liable for

• damages. Make sure your emergency
• perations plan (EOP) allows for a registration

process.

 Public Entity WC coverage sometimes requires a

resolution stating that the governing body intends to provide WC coverage to volunteers – coverage is not always automatic.

PEPRA – Future WC Impacts

 2% @ 62 if no reciprocal

• Employee may retire later (older workforce)
• People with prior injuries will work longer
• Longer recovery times = more TD
• More severe injuries = more PD
• Increase in disability retirements

 Other Considerations?

Other Things to Consider

 When should you require Functional

Capacity Evaluations?

 When should you require Fitness For Duty

Evaluations?

 Are the Physical Requirements in your Job

Descriptions Current?

 How do you coordinate provision of other

benefits (STD, LTD)?

 Disability Retirements

Acronyms

Acronym Means AOE/COE Arising Out of Employment/Course of Employment C&R Compromise and Release DIR Department of Industrial Relations DOI Department of Insurance DSW Disaster Service Worker DWC-1 WCAB form number for claim form ExMod Experience Modifier FCE Functional Capacity Evaluation FEHA Fair Employment and Housing Act FFD Fitness For Duty LTD Long Term Disability MPN Medical Provider Network

Acronym Means NOPE Notice of Potential Eligibility PD Permanent Disability P&S Permanent and Stationary RTW Return to Work SJDV Supplemental Job Displacement Voucher STD Short Term Disability TD Temporary Disability TMD Temporary Modified Duty TPA Third Party Administrator TPD Temporary Partial Disability TTD Temporary Total Disability UR Utilization Review WCAB Workers’ Compensation Appeals Board

Handy WC References

 Conference Handouts (PARMA, PRIMA,

CAJPA, COSIPA)

 www.leginfo.ca.gov  Your TPA, Insurer, Risk Pool etc.  Defense firms’ email lists and newsletters  IEA seminars  Colleagues at other agencies

Contact Info

Shari Deutsch, ARM-P

Central San 5019 Imhoff Place Martinez, CA 94553 (925) 229-7320 sdeutsch@centralsan.org