Employers do not realize the amount of control that they have over the direct and indirect costs of workers’ compensation. The workers’ compensation system was built to benefit employers who implement injury prevention programs by allowing them to pay lower premiums. Most employers do not effectively control their costs, and some employers put their entire businesses at risk by not implementing programs that reduce or eliminate injuries and reduce lost work days.
Several years ago, when I first stared my consulting practice, I received a panicked 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 they had made no corrections after several visits from the insurance company’s loss control representatives.
The agent advised me that he had already called 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.
After meeting with this employer, I quickly realized that their injury management program was a cycle: injury, terminate, settle—the revolving door that had earned them their Notice of Cancellation.
Most companies focus their efforts on implementing safety procedures and they hope that their employees will follow directions and not have any injuries. In reality, employees are injured every day, so the key issue is how to eliminate or lower workplace injuries while simultaneously reducing the number of lost work days for injured employees. The solution is having a plan that addresses total injury management by reducing or eliminating injuries, reducing or eliminating lost work days and reducing or eliminating the readiness to litigate and settle workers’ compensation claims. It is a total package.
Reducing or eliminating lost work days is a critical piece of any injury management program. 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. The solution – implementing policies and procedures that facilitate injured employees returning to work as productive members of your team.
An effective injury management or return to work program starts before an injury happens, not on the day the employee files the First Report of Injury or Illness. When treating physicians issue light duty restrictions, employers must have a well defined plan in place to bring the employee back to work immediately. Reality, most employers do not have effective return to work policies or procedures.