Getting Back on the Horse

Insurance companies charge a pretty penny for workers' compensation premiums. Those premiums go up substantially when your company has a claim, especially if it includes time loss as well as medical expenses.

July 31, 2003


From slipping off a roof to stepping on a nail, there are lots of ways to get hurt while working for a remodeling company. Even the best safety plan can't keep knees and backs from aging and occasionally giving way, especially in a job with lots of physical requirements.

Recognizing these facts, insurance companies charge a pretty penny for workers' compensation premiums. Those premiums go up substantially when your company has a claim, especially if it includes time loss as well as medical expenses. Either way, your insurer re-evaluates your experience modification factor - a multiplier that compares the likelihood that your company will have a claim with the average likelihood for similar companies in the state. The factor usually takes into account the past three years, so any claim will increase your factor and your premium for the next three years.

"With the state plan, if you have someone go out on time loss, rates double the next year. That's your profit margin," says Andrew Sandstrom of Disability Management Solutions in Woodinville, Wash.

Getting employees back to work before they are eligible for time loss, even in a transitional or light-duty capacity, reduces the impact on your experience modification. And even if they have to miss time, the sooner they get back, the better your insurance rates. A return-to-work policy has a number of psychological advantages as well.

"It gets guys to go back to the doctor and ask about it, gets them to be proactive in getting themselves back to work as well," says Joe Wendelberger, president and owner of J. Anthony Construction Inc. and J. Anthony Homes in Pewaukee, Wis. He chairs the insurance task force of the Milwaukee Metropolitan Builders Association. "I want them to be productive, get back to work, not lose their paycheck. It's a win-win all around," he says. "Statistics tell you the longer people are off of work, the more comfortable people become with it."

Sandstrom, who handled medical placements for Boeing for six years, adds: "Having them in the office makes them feel like part of the team, and people don't screw the team."


It's the law: Protect employee privacy on all health matters

This spring and summer, you probably noticed differences in the way physicians and pharmacists work with their patients. It's because of HIPAA, the Health Insurance Portability & Accountability Act of 1996. On April 14, the portion of the act dealing with patient privacy issues went into effect. It covers verbal, written and electronic information, and applies to employers who provide health-care coverage to their employees. Andrew Sandstrom suggests that remodelers adopt the following practices:

Thousands of dollars saved

In the mid-1990s, Chimney Doctors, a restoration company based in Milwaukee, got slammed with $100,000 in medical and wage claims from two employees with pre-existing back conditions.

To put that in perspective, its insurance agent of seven years, Paul Kraemer of The Starr Group, gives the example of a $1,000 claim - $500 in medical and $500 in days lost - that might add $2,275 in premium costs over three years. (Times 100, that's $227,500 in extra costs.)

"With a light-duty, early return to work, you might get the employee back before day four," Kraemer says. In Wisconsin, as in many states, there is a three-day waiting period before an injured worker is eligible for lost time. "If any lost time is paid to an employee for a workers' comp claim, then the full 100% of that claim is used in mod calculation. If it is medical only, then the medical costs are reduced by 70% when they go to calculate the experience mod. Now we only have the $500 of medical, reduced by 70%." With only $150 instead of $1,000 affecting the experience mod, the three-year insurance cost is reduced to $342, a savings of $1,933. (Times 100, that's $193,300.)

"If we'd been in the mode we're in today, instead of having that full $100,000 show up, we would have had the guys on light duty throughout the whole period," says Bill Hussell, founder and owner of Chimney Doctors. "Even if they're in the hospital bed recovering from surgery, we would have had them on light duty and paid them wages."

Hussell, who implemented a return-to-work policy four years ago, pays workers on light duty 75% of their regular wages, 5% more than they would get from workers' comp. He spent time reviewing the light-duty policy with employees at Monday staff meetings and has made it part of the employee manual as well.

"Some of the employees, if you asked them, they would rather sit home, but they understand why we do this," Hussell says.

Get job descriptions right (and written)

Meticulous documentation is an essential component of managing job-related injuries, so your return-to-work plan should start with job descriptions. Sandstrom suggests setting the groundwork by writing or rewriting job descriptions for every position in the company, preferably with the help of a human relations consultant or a vocational rehabilitation counselor for the physical component. The description should include:

  • tasks done daily, weekly and monthly.
  • specific physical requirements (such as the ability to lift a 40-pound box of nails and carry it 50 feet twice per week, or to be able to work with arms overhead at least 10 hours per week).
  • personal and interpersonal behaviors.
  • skill sets.
  • required training and education.

Present the job description at the time of hiring and ask your new employee to sign it. If you're creating job descriptions after the fact, have your staff sign them as soon as they're written.

Without such descriptions, a doctor has no objective way to know exactly what employees do and therefore whether they can return to their previous job. With the written description, employees can't exaggerate the scope of their work and convince the doctor to write a note for more time off than necessary. On the other hand, if employees genuinely can no longer do their job and you have to let them go (after seeing if there is an open position within your firm that might be suitable), the signed job description will keep you from being sued for discrimination under the Americans with Disabilities Act.


Prepare a workers' comp packet

The chances of your return-to-work plan going according to plan increase when you have a packet of information prepared and stored in every company vehicle and/or at every job site.

Joe Wendelberger makes sure each of J. Anthony's trucks, vans and trailers has a white envelope that includes:

Dissemination and documentation

Take a proactive approach by having a return-to-work plan before someone gets hurt. And don't just have the plan; make sure all employees know what it is, what they need to do in case of an accident and why this is so important. Write out policy and procedures as part of your safety manual and/or employee handbook.

Topics to consider include what you would do if an employee suffers an injury that is not work-related, how long you would willing to allow someone to be on light or transitional duty and what kinds of light-duty work might be available. Typical options include surveying customers, sweeping, picking up scrap, filing paperwork, tool inventory, answering phones, marketing activities, completing punchlists and taking safety training or other education. You'll also want to explore the possibility of sending employees who aren't severely injured to workers' comp clinics rather than the emergency room, not only to keep costs down but also to make claim management easier for all parties.

Different companies put different positions in charge of claim management. Chimney Doctors' main estimator is its safety officer, who handles all claims and all contact with doctors and nurses. At J. Anthony, an administrative assistant handles most of the paperwork, but she, Wendelberger and the carpentry supervisor all follow up with injured workers.

The paperwork starts with writing an accident report for the insurer and the doctor, as well as for documentation of the company's version of events, should the need arise. Include specific dates and times; all carriers require that injuries be reported within a certain amount of time, depending on the carrier and state.

The safety officer then should follow up with the doctor or nurse after the initial visit and subsequent treatments. Don't ask if the employee can come back to work, says Kraemer - instead, ask what the employee's restrictions are. That way, you can discuss whether light-duty options would be appropriate. Again, keep a phone log noting the dates and times of all contacts, messages left, the names of the people spoken to and information on prognosis or progress.

"If you provide light duty and the employee refuses, even if he/she has been released for slight duty, the insurance company is not required to pay anything," Kraemer explains.

Wendelberger, who's contesting a former employee's claim, advises getting restrictions as well as the release in writing from the doctor. Once an employee has returned to work on light duty, his assistant keeps daily notes on hours worked, duties assigned and witnesses. "Once you've filed a workers' comp claim, we are married until you are healed," he says. "The documentation on our end has to be very, very good."

That includes conversations with the employee. Sandstrom suggests calling employees after medical appointments or once a week to check in and let them know they're wanted back.

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