Imagine if everyone shared your vision of getting ill or injured employees back to work?  In today’s tough economy, it may be difficult to sell your company on the benefits of continuing to offer injured employees viable light duty jobs especially if you are considering a layoff.

A recent headline in the Lancaster Sunday News read “City Pays 1.2 Million to Cover Injuries in Change of Policy – Light Duty Programs for Those Hurt on the Job Out – Settlements In.  According to the reporter, the new City administration made the decision to stop transferring injured employees to positions that were light; instead they were planning to offer all of them a settlement to leave the City. The City Administrator said “this approach will cost the city more now, but we will save money in the long term.”  

So, Are Return to Work Programs Still Viable?

The answer is easy – in tough economic times businesses can not afford to overlook return to work programs because indemnity or lost wage payments are one of the key drivers of workers compensation cost. If you opt to keep the employee out of work, you risk paying for lost wages or indemnity benefits until the employee exhausts the state mandated benefits.  Indemnity payments impact your experience modification and ultimately drive up the cost of your workers’ compensation premiums as well as, your cost of doing business.

The average company can not afford to take the position that the City of Lancaster, a self-insured organization, took because multiple settlements and lack of return to work programs will find your company uninsurable. Several years ago, when I first started my consulting practice, I received a frantic phone call from an insurance agent who advised me that his client received a Notice of Cancellation and that he had sixty days to find them new coverage. Apparently, the company had numerous accidents, large settlements and their idea of injury management was – injury, terminate, settle, a cycle that earned them the Notice of Cancellation.

This employer did not attempt to quantify the impact of allowing injured employees who could return to work, the option to stay at home, nor did they evaluate the long term cost of offering a settlement to every injured employee versus retaining the employee with some job accommodation. If this employer had asked two simple questions—what is the cost of leaving these employees at home? And what is the long term cost of settling these claims? —they might not have been so quick to say, “We have nothing available – let’s settle.”

The reality for this insured, his agent could not secure replacement coverage. The agent advised me that he contacted several underwriters to find out if they would be interested in issuing a quote for this client. After he relayed the fact that the company’s paid-in premium amount was $280,000 and the claims paid-out total was $850,000 the underwriters broke into hysterical laughter. No one was interested in providing workers’ compensation coverage for this company. The client faced the real issue of closing his business because he could not secure coverage. In today’s economic climate and as employers make decisions to terminate or layoff or refuse to offer light duty positions to injured employees, they must evaluate the long term cost of this adverse decision.

Workers Compensation is not forgiving and the system is built to punish employer’s long term for decisions they make now. Frankly, employers are not in a win-win situation when it comes to workplace injuries. If you leave the employee at home, the insurance carrier pays them to be there. This, in turn, affects the amount of money you pay for premiums. If you refuse to bring the employee back to work you may be in violation of the Americans with Disabilities Act – ADA. If you bring the employee back to work in a nonproductive light-duty position that has them counting paperclips, you are paying state and federal taxes as well as benefits for an employee who is not contributing anything to your bottom line. While settlements seem like the best immediate option for employers this does not eliminate their long term cost.  

An argument could also be made that the cost associated with injured employees remaining off work does not stop when companies, like the City of Lancaster, make the decision to settle the worker compensation claim. The settlement actually transfers the cost of the injury to the general public, the next employer or the social security system in the form of disability payment, when the settlement money runs out.  

What can you do to keep your organizations return to work program viable?

Quantify the cost – everyone especially today, understands dollars and cents – your only option is proving that the return to work program is financially beneficial to your company’s bottom-line. Imagine if everyone shared your return to work vision – the only way to share your vision – speak to your management team in financial terms. “It cost X to keep the employee at home, it cost Y to settle them out of the system, the long term impact on our profits is Z, the three year impact on our workers compensation cost is XYZ. Based on my evaluation I recommend that we implement a proactive return to work program instead” – This vision will sell even the most skeptic managers. Settlements may seem like the best option, return to work is the most cost effective solution.

From the Department of Labor – Website – 5/5/09 – Press Release

The U.S. Department of Labor’s Wage and Hour Division has fined Demon Demo Inc. a child labor civil money penalty following an investigation into the death of a teenage worker at the company’s Gwinnett Place mall demolition site from a second floor fall.

This penalty is the first assessed by the division under the Genetic Information Nondiscrimination Act of 2008. That statute increased the maximum level of civil money penalties to $50,000 for each child labor violation that results in the work-related death or serious injury of a minor. In cases where the employer’s violation is repeated or willful, the maximum penalty is $100,000. In addition to the $50,000 penalty, child labor fines totaling $3,162 were assessed because the company failed to keep accurate records and allowed the minor to work in an occupation deemed hazardous by the secretary of labor.

“The federal rules governing the employment of minors are clear, and the consequences for failing to comply are serious,” said Secretary of Labor Hilda L. Solis. “Young workers must be employed safely and legally.”

A listing of hazardous occupations for minors is available on the Wage and Hour Division’s Web site at http://www.dol.gov/dol/topic/youthlabor/hazardousjobs.htm. Certain industries allow individuals under age 18 to perform certain tasks at worksites where primary work activity is dangerous, but these tasks are very specific, and state and federal government closely monitor compliance.

The company has 15 days from receipt of the civil money penalty assessment letter to file an exception with the Labor Department if it wishes to contest the $53,162 civil money penalty assessment. Civil money penalty appeals are heard by a Department of Labor administrative law judge.

The Wage and Hour Division also cited the company for failing to pay 126 workers overtime compensation as required by the Fair Labor Standards Act (FLSA). The company will pay $108,869 in back wages as a result of the wage violations.

The FLSA requires covered employees to be paid at least the federal minimum wage for all hours worked, and time and one-half their regular rates of pay for hours worked over 40 per week. Employers must also maintain accurate time and payroll records. The current federal minimum wage for covered, nonexempt employees is $6.55 per hour. Effective July 24, 2009, the minimum wage will increase to $7.25 per hour. For more information about the FLSA, call the Department of Labor’s toll-free helpline at 866-4US-WAGE (487-9243). Information is also available on the Internet at www.wagehour.dol.gov or by contacting the Georgia District Office of the Wage and Hour Division, 61 Forsyth St. S.W., Room 7M10; phone 404-893-4600.

Case: Bruce Houck, Individually and as the Representative for the Estate of Ellen Houck, Deceased vs. Tarragon Management and AIG Claims Services, Inc. No. 1D08-0081 (Fla. 1st Dist. Ct. App. 02/24/09)

Date of Accident: September 8, 2002

Background: Ellen was employed as a property manager in Jacksonville, Florida. Mr. Michael Cecala was a fellow property manager employed by the same company in their North Miami office. Ellen had trained Mr. Cecala, and he requested additional training from Ellen, which the employer approved. The training was to commence on Monday morning, September 9, 2002, and expected to last the entire week. Because Ellen had a friend in Ft. Lauderdale, she made arrangements to fly there on Saturday before her training assignment. The two friends planned to pass the weekend in purely leisure activities.

Ellen’s supervisor explained that employees required to travel for company business could fly to their business destination early, as the employer had to pay for the round trip ticket in any event. Employees were told that they were on their own during the days before the business activity started, and the employer did not reimburse any expenses incurred by the employees for those days.

For personal reasons, Ellen’s friend could not meet her in Ft. Lauderdale. Consequently, Mr. Cecala met Ellen at the airport, and drove her to an Employer owned condominium where Ellen planned to stay for the week. Mr. Cecala then drove Ellen to a restaurant for dinner, during which they discussed business and non business topics. After dinner they went window shopping near the beach, during which time they did not discuss business. Ellen wanted to go dancing, and Mr. Cecala agreed. They drove to a night club, parking across the street. At about 2:00 a.m. she was attempting to cross the street, Ellen was struck by a car suffering fatal injury.

Is This Claim Compensable?

Ellen’s family sought payment of death benefits and funeral expenses, asserting that Ellen was a traveling employee at the time of her death. The JCC (Worker Comp Court) denied the benefits finding that she was not in the course and scope of her employment when the accident happened. The further asserted that Ellen was not a traveling employee pusuant to FS 440.092(4).

The Appelate Court Ruling:

Ellen, although on a trip, was not a “travelling employee” when the accident occurred. For purely personal reasons, Ellen decided to fly to Ft. Lauderdale on the Saturday before her business responsibilities. She planned early travel in order to spend Saturday night and all day Sunday, engaged in purely leisure activities with a friend.

The court noted that unlike a flight attendant obligated to remain away from home in between assignments, Ellen’s presence in Ft. Lauderdale at the time of the accident was purely voluntary. The fact that she engaged in business discussions over dinner did not alter her status. Ellen did not fall into the category of a traveling employee, because the employer had no requirements for her to be in Ft. Lauderdale on Saturday.

The court added, that although Ellen was not a traveling employee at the time of her accident she could have been afforded workers compensation benefits if she had been in the course and scope of her employment at the time of her death. In this case Ellen, was in the course and scope of her employment when she traveled from the airport to the employer owned condominium and perhaps during the dinner and discussion over dinner. However, the connection to her employment was broken when she and Mr. Cecala went window shopping and subsequent traveled to the night club did not restore her employment connection.

Conclusion: Death benefits were denied because Ellen was not in the course and scope of her employment nor was she considered a traveling employee.

Very interesting case.

Press Release: National Return to Work Week is an opportunity for everyone involved in the workers compensation and disability management process to demonstrate their commitment to helping injured, disabled or ill employees stay-at-work or return-to-work. This week highlights the importance of employee retention and employee ability. What can the employee do? Verses what they can not do – Disability does not mean no ability.

“The stakes have never been higher” said Margaret Spence, founder of National Return to Work Week. “Every day we hear disturbing information about layoffs and downsizing – when company’s layoff employees, what happens to employees who are injured on the job or have illness that prevent them from find new employment. What do we do with these individuals? Are they just forgotten?”

Annually, 4.1 million employees sustain occupational injury or illness – 1.2 million have lost work days directly related to their injury or illness. Employees who are off work for more than sixteen weeks seldom return to the workforce. Employees with permanent work related disabilities are more likely to become unemployable. The unemployment rate for people with disabilities is 14.0 percent according to the Office of Disability Employment Policy. These statistics prompted, Margaret Spence to submit National Return to Work Week to Chase’s Calendar of Events last April, to her surprise it was accepted and added to the 2009 Calendar.

From a Workers Compensation standpoint – when employees are injured in the workforce there is a monetary reward mindset, a feeling that money is better than a job.  This is the only system that rewards employees to stop working – even when they are capable of returning to some employment. “We allow people to join the ranks of the unemployed for the price of a pick up truck” says Spence.

While most employees who are injured immediately return to work and continue their regular job – there are far too many who we settle out of the system. These employees either move on to a new employer, sometimes repeating the cycle, or they move to the ranks of the unemployed. There is also another subset that move into the Social Security System and become permanently disabled – adding a new burden to an already over taxed system.

From a non-work related disability standpoint – once an employee becomes eligible for long term disability, there may be few options to help the employee return to gainful employment or to encourage the employer to explore job or task modifications that would allow the employee to return to work in some capacity.

“Are there other options? says Spence. “Why can’t we make an effort to implement return to work programs that retain injured or ill employees rather than discarding them from the workforce?” she added “even in a challenging economic environment return to work programs are vital. Employers are not conducting a thorough evaluation of the long-term cost of workers compensation and disability coverage in their termination or retention decisions. Many companies may emerge from the economic downturn is dire financial situations because of the decisions they are making about ill, injured or disabled employees today.”

National Return to Work Week 2009 will bring together employers, employees, treating physicians, vocational experts, insurance, legal professionals and disability providers from around the country to share best practices and exchange information to increase return to work opportunities for ill, injured and disabled employees. Together we can highlight the importance of Return to Work, Stay at Work or Transitional Duty Programs.

The NRTWW Motto – Disability does not mean no ability – injured, ill and disabled employees should not be discarded from the workforce. Nor should we create a system that rewards and allows them to discard themselves from the workforce.

For details and more information about National Return to Work Week, becoming a partner, or participating in a our virtual conference, please visit www.nationalreturntoworkweek.org

About National Return to Work Week – This week highlights the impact of not implementing proactive stay-at-work or return to work programs for ill, injured or disabled employees. It is a full week of national educational and best practices presentations aimed at bringing disability management to the forefront of the national employment retention discussion. National Return to Work will be celebrated annually during the second week of May. Visit our website: www.nationalreturntoworkweek.org for more information and to get involved.

About Margaret Spence, CWC, RMPE – Margaret is the author of From Workers Comp Claimant to Valued Employee – and the founder of National Return to Work Week. She is an injury management expert on a mission to help employers understand the importance of implementing proactive return to work or stay at work programs. Learn more about Margaret Spence, visit her website at www.margaretspence.com

Chase’s Calendar of Events – Brothers William D. Chase, a journalist and publisher from Michigan, and Harrison V. Chase, a university social scientist from Florida, founded Chase’s Calendar of Events in 1957. Chase’s Calendar of Events today is the most comprehensive and authoritative reference available on special events, holidays, federal and state observances, historic anniversaries and more. Each spring, thousands of new entries are submitted to join the more than 12,000 items that make up each year’s book. Each event listing (where applicable) contains contact and mailing information. There is no charge to be listed in Chase’s. Each new edition appears in late September preceding the year in question. Visit their website – www.chases.com

Article from – Risk & Insurance – Read Complete Article Here -

Medicare, the Bull in the Settlement China Shop

The Medicare Secondary Payer Act and the new SCHIP Extension Act of 2007 will have very different effects on workers’ comp and liability cases.

By JAMES POCIUS, an attorney and shareholder with Marshall Dennehey in Scranton, Pa., and an expert on Medicare and workers’ compensation.

Using the Medicare Secondary Payer Act and the new SCHIP Extension Act passed in December of 2007, Medicare is bulling its way into workers’ compensation and liability settlements. In an attempt to recover conditional payments and not expend future funds in cases where another carrier or self-insured might be liable, these new Medicare requirements are creating a minefield of problems, which could explode during any workers’ compensation or liability settlement.

In order to accurately examine the effect of these two statutes, and their possible interplay, some explanation is necessary.

The Medicare Secondary Payer Act was passed in the late 1980’s. Essentially, it gives Medicare the power to collect any conditional payments (commonly known as Medicare liens) from any first party carrier or any other participant who could make a payment or receive a payment in a case. If a Medicare beneficiary is involved in a workers’ compensation or liability case, Medicare is able to collect from any of the insurers or plaintiffs or plaintiffs’ counsel (fees) by virtue of the Medicare Secondary Payer Act. Further, if Medicare has filed suit against any primary payer or recipient, the law enables Medicare to receive a 100 percent penalty in addition to the amount owed.

This is an excellent article and I recommend that everyone read the article.

We have a weekly workers compensation radio program on Blog Talk Radio. We will discuss issues in the workers comp system via our Free on-line radio program.

Upcoming shows:

Impact of Injuries on Business Profitability – September 29, 2008 at 7:00 p.m. Eastern-time zone. Do you know what injuries are costing your company? Do you understand how injuries impact your business profitability. In this economy it is prudent to have the answer now! Click her to view the show

Ouch I’m Injured Now What? – What should employers do when injured employees file a workers comp claim? Visit our radio website – Click Here   – Show will air – October 6, 2008 at 7:00 p.m. Eastern-time zone. The show is recorded so you can listen at any time.