Agent FAQs

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What is workers’ compensation?

Workers’ compensation, often called workers’ comp, or shortened to WC, is an insurance program that protects employers when one of your client’s employees is hurt on the job.

When a company is covered by workers’ comp, insurance will replace the employee’s wages, pay their medical bills, and help with other injury-related costs for the employee. By law, each employer has a duty to care for its employees through WC coverage, while employees incur no cost. Employees pay no premiums, deductibles or co-pays.

Wisconsin enacted the first U.S. workers’ compensation program in 1911. By 1949 every state had a workers’ compensation system.*

* OLR Research Report

What does DWC stand for?

DWC is an abbreviation for Division of Workers’ Compensation. Each state has its own DWC, or Division of Workers’ Compensation, and its own names for workers’ compensation programs, so it can be a little confusing. For instance, California’s DWC goes by the name Division of Workers’ Compensation and is administered through the Department of Industrial Relations, while Kentucky administers the Department of Workers’ Claims through the Kentucky Labor Cabinet.

Although the names may differ, each WC system has the same functions and purpose. DWCs administer workers’ compensation laws, resolve disputes, assist injured workers, and provide information about the systems and how workers can gain access.

What is a Medical Provider Network?

An MPN, or Multiple Provider Network, is a group of health care providers approved to treat injured workers within a specific state’s workers’ compensation program. The network is set up by your client’s insurer and approved by the state’s DWC’s administrative director.

What are rating bureaus?

Insurers collect a mountain of data in the course of doing business. Those carriers send their workers’ comp stats to rating bureaus to analyze the workers’ comp claims. The bureaus analyze trends, crunch numbers and come up with objective rates – and insurance carriers are happy to go elsewhere for this time-consuming and necessary job.

Rating bureaus also create codes that classify businesses according to what they do and the risk involved. Each business is given a 4-digit, (or in some states, a 3-digit) code, known as the class code, that reflects the jobs its employees perform. For instance, an accounting firm has a different code than a plumbing company. By knowing what each industry-type does, insurers can price their premiums more accurately.

The bureaus also determine experience modification rates, also known as MODs. The class code and the MOD are among the factors that determine your client’s premium rate.

Most states choose to join the main rating bureau for the United States – NCCI, or the National Council on Compensation Insurance. But just as states show their independence in their DWC names, some opt to go their own way and create their own rating bureaus. Examples include New York, California and New Jersey.

What criteria do insurance carriers use to determine workers’ comp premiums?

What your client does can bring risk to an insurance carrier. Your client pays for that risk in their premium. For instance, many construction company employees work with and around heavy equipment. But an accounting firm’s employees work in an office. Each industry carries its own risk class and that is reflected in its class code.

So, underwriters look at a company’s class code(s) (what type of work they do) and their claims history in the form of the experience modification rate – or MOD (a calculation used to determine whether a company has high or low claim losses) to determine a workers’ comp premium.

Three years’ of a company’s claim history is weighed to come up with the insurer’s risk. Some companies make a common and huge mistake – under reporting workers’ compensation injuries for fear of increased premiums.

But claim frequency causes less damage to a company’s MOD than high-dollar claims. Besides, all WC incidents must be reported or the cost will be much bigger when the unreported claims are discovered and penalties are assessed or lawsuits are filed.

The company’s payroll, the carrier’s manual rates and the carrier’s application of scheduled credit/debit and the states’ taxes and fees are other contributing factors.

What is the experience modification rate?

The experience modification rate, or experience modifier, is usually shortened to MOD. Rating bureaus create MODs. They study a company’s 3-year average of WC claims – whether claims are higher or lower than normal – then adjust the rate accordingly.

Bureaus modify rates in the form of credits and debits just like a bank. They begin with an average, or neutral base, of 1.00. Let’s say Company A had a great total – a better than average claim history. But Company B didn’t do so well and had some big ticket claims and a lot of smaller ones; they get dinged and receive a debit.

Company A scores 0.95, which means it has a less than average claim history and as an applicant earned a 5% premium credit, which is 5% better than the 1.00 average. But with a bad claim history, Company B carried a MOD of 1.10. In that case, a 10-point debit is assessed and 10% is added to the premium.

Why are 3 years’ of claims is necessary? Broad experience is needed to calculate a MOD fairly. The MOD starts at 1.00. Without any claim data, for instance, in the case of a company that has operated for less than 3 years, no debit or credit is applied and the number stays flat at 1.00 – an average rating.

It’s important for employers to understand that their MOD is a snapshot of their claims history from the past 3 years. Even if the last two years were great, if large claims (either dollar or volume) were filed three years earlier, the MOD can be affected drastically and insurance adjusters will quote much larger than expected premiums.

In the end the MOD determines whether your client can find affordable workers’ comp insurance on the “open market” or whether you need to consider a relationship with a PEO like Insured Solutions. Since a company’s MOD is a snapshot of the last 3 years, one bad year can tip the scales.

What is a PEO?

A PEO is short for Professional Employer Organization. You can bring clients under the umbrella of a PEO to act as co-employers of your clients’ own staff. PEOs share their tax IDs with your clients. Since the PEO has a bigger pool of employees (counting all the other employer groups under its umbrella), your clients gain flexibility and several advantages.

An SBA study estimated that the average small business owner spends between 7% and 25% of his or her time handling employee-related paperwork. When you add in the time spent on all the other HR tasks, this figure rises to 35% to 45%. By outsourcing some or all of their employee-related functions, small business owners can focus on the business. And in the process, they can improve productivity and save money.

More partnership advantages:

  • access to the PEO’s MOD – if the onwer’s MOD is bad and premium rates are too high
  • payroll administration, tax filing and government compliance are handled by the PEO
  • outsourced employee administration and human resources
  • consolidated HR, risk management and unemployment claim administration
  • guidance through workers’ compensation claim management
  • elimination of workers’ comp audits

But some companies mistakenly think that PEOs are only for large businesses and only for payroll services. Assure them that that’s not so.

Any size business receives an equal or better benefit from PEOs once they join – payroll services are just the beginning!

Business owners may also fear loss of control. The opposite is true. By sharing responsibilities, owners have time to concentrate on what’s important – growth! Managers can still hire and fire employees – and professional guidance is available through stressful situations like firings and layoffs.

What is workers’ comp through a PEO? How is it different?

In the workers’ comp arena, a PEO like Insured Solutions knows the ins and outs of workers’ comp. When a business has complex tax or legal issues, they don’t do their own taxes, they use a CPA or an attorney for their expertise and knowledge. A company partners with a PEO for the depth of what they know.

PEOs navigate pitfalls and problems before they happen, putting together aggressive plans to protect your clients and giving them the tools needed to succeed. They know that when their clients do well, the PEO thrives.

Can owners be excluded from covering themselves on workers’ comp?

Yes, up to 5 owners can exclude themselves from workers’ comp with a direct write policy.

There’s no problem excluding an owner when a policy is written directly with a carrier, but owners cannot be excluded in a PEO relationship. Most states do not allow the owner’s exclusion within a PEO since the only exclusions allowed are to the master policy holder, which is the PEO, not the PEO’s client.

When should you report a workers’ comp claim?

Injuries should be reported immediately – within 24 hours. When in doubt – report. Every complaint needs a First Report of Injury form filled out followed by investigation forms as back up to start the paper trail.

The injury report is submitted to the carrier to get a claim number. If the incident turns out to be minor, it is marked IRO (Incident Report Only) or medical only for the records. But it stays in the system in case something comes up later on the claim. If no other action is taken within a year, the claim is closed.

Some employers don’t report what they think are insignificant claims for fear it will affect their insurance rates, but high dollar claims are more significant in damaging MODs now than small claims. It’s always best to report.

Can an employer terminate an employee who is out on workers’ comp leave?

Of course your client CAN fire an employee on workers’ comp leave, but SHOULD they? Absolutely not! If they do so, their workers’ comp rates will go through the roof. The state will charge the client all of the benefits with a 300% interest rate as a penalty.

However, for employees on light duty with behavior concerns (but not for job performance concerns), suspension without pay can be an option.

Are prescription drugs covered under workers’ comp?

All prescription drugs are covered under workers’ comp, although some drugs require an approval process. Programs differ in how they administer prescription drugs. Some carriers issue prescription cards (fill cards). The fill card is linked to a claim number, then the employee takes it to a drug store and the card is charged to that claim number. Others make the employee pay up front and they are reimbursed.

Is medical care covered even if there is no lost time?

Yes, medical care is always covered under workers’ comp even when there is no lost time.

The good news for your clients? Due to fee schedules that states set for workers’ comp provider payments, a $1,000 retail medical bill may end up costing only $500 due to pre-arranged prices negotiated by states for workers’ comp fees.

The down side is that some doctors opt out of the workers’ comp system because of lower reimbursement, then states have problems finding doctors to participate in their programs.

What are monopolistic states?

Legislatures in a handful of states mandate that companies buy workers’ comp directly from their states instead of the open marketplace.

A monopoly is defined by the American Heritage Dictionary as, “Exclusive control by one group of the means of producing or selling a commodity or service. ‘Monopoly frequently…arises from government support or from collusive agreements among individuals.’ (Milton Friedman) ” **

These states are considered “monopolistic” since companies cannot choose where to go for coverage. North Dakota, Ohio, Washington, West Virginia and Wyoming are currently monopolistic.

**The American Heritage Dictionary

What is subrogation?

A right of subrogation creates a means for insurers to go after a third party who was at fault and caused the insurer to lose money in the form of claim dollars.

Ultimately, it is a legal way for the insurance company to recover money already paid out under a policy to one insured party and to retrieve that money from another person/company/entity that was involved and considered at fault in the accident/incident.

What is a waiver of subrogation?

Contractors seeking to do business with large corporate entities – predominately in Construction trades – pay for this Work Comp policy inclusion which releases the customer of the contractor from liability due to customer employees’ and/or other worksite (third party) contractors negligence leading to, contributing to, or causing injury to employee(s) of the contractor providing the waiver. It is akin to a “Hold Harmless” clause where customer insurers are not liable for employee mistakes that lead to a contractor employee injury meaning the Work Comp provider of the contractor is solely responsible for covered employee injuries with no third-party recourse.

A waiver of subrogation, commonly known as a WOS, is inserted as a contract clause that releases the right of an insurer to sue a third party.

Waivers are intended to minimize lawsuits and to protect companies that hire contractors or subcontractors.

Contractors that work with large companies – mostly in construction – typically get a workers’ comp waiver of subrogation that releases the customer of the contractor from liability due to the customer’s employees’ or a third party conractor’s action (or inaction) that leads to an injury of the contractor’s employee. So, if someone is injured on the job site, the contractor is liable for the workers’ comp injury and cannot go after a third party for compensation.

While a WOS can always be requested by the contracting company, there are often fees associated with adding this clause to the contractor’s policy due to the additional risk the carrier takes on.

From injury to claim: A step-by-step guide to workers' comp.

Step 1.

When a complaint of pain or an injury occurs on the job, it must be reported to a supervisor or manager. Injuries can be reported by the employee or observed by someone else. Either way, every employee has a duty to report an injury that they see within 24 hours.

Step 2.

The supervisor reports the injury to the administration level – the employer/owner, office administrator or human resources department.

Step 3.

Depending on the injury, the administrative staff sends the employee for the appropriate level of evaluation or treatment to an MPN – a group of health care providers approved within the state’s WC program.

Step 4.

Then the flurry of paperwork begins. A First Report of Injury form must be submitted along with any additional forms required by the state asap. Employees are interviewed, an investigation form is filled out, and the supervisor completes a report. Necessary forms are sent to the workers’ comp carrier as they are completed, but the First Report of Injury is submitted to the carrier the same day.

Step 5.

The claim is assigned a number by the carrier and the clock starts ticking. If no action is taken within a year – no paperwork like medical bills submitted – the claim is shut down. However, if an employee is hurt and no claim is opened and an employee says they were hurt 5 years before, that employee can still go after workers’ comp from an employer even if they don’t work for the company any longer. Five years later evidence is slim to non-existent. Witnesses may not recall and no reports were taken, so not one can dispute their claim.

Step 6.

The employer should communicate with the claimant routinely.

Step 7.

If lost time with restrictions, the employer can always offer – in writing, possibly by certified mail – strategic Return to Work program/Light Duty work to lower the company’s workers’ comp claim dollars.

If my client finds out about a prospect's/employee's previous claims, what should they do?

Previous injuries can be found after a job offer is made by using a Post Offer Medical Questionnaire followed by a medical evaluation based on the EFJ (Essential Functions of the Job). The EFJ are the duties the employee must be able to perform to keep that position. The medical evaluation can show whether the applicant can perform the job without undue risk of injury. If not, the job offer can be withdrawn and if no other suitable job is available, the applicant is not hired nor is required to be hired.

But once someone is hired, it’s too late to dismiss the employee for a previous injury. If the new hire cannot meet the EFJ, the employer can withdrawn that job offer, but must find another job that the new employee can perform without risk of injury.

Employers should also administer pre-employment drug screenings and physicals to prospect/employees who will/do perform physically demanding jobs.

Employees need to sign the job description. If his/her job duties aggravate a previous injury and that injury shows up on the former employer’s workers’ comp claim history, your client’s loss may be lessened through apportionment.

Can my client submit a claim for an undocumented employee injured on the job?

Every employee, regardless of legal status to work in the U.S., are covered under the employer’s workers’ comp plan and receives the same care and benefits as any other worker. This scenario makes clear the importance of diligence when your client check an employee’s legal status.

If an employer is thought to have willfully hired and retained workers who are illegally in the U.S., they are fined. But from the injured worker point of view, a claim is still submitted and processed as usual.

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Are part-time employees covered under workers' comp?

Part-time work equals full-time workers’ comp benefits. But if an employee works more than one job and is injured, the job on which he is injured is responsible for the workers’ comp.

Are independent contractors covered?

Independent contractors are not eligible for workers’ compensation coverage and employers are not required by state law to purchase coverage for independent contractors. But some employers misclassify employees as independent contractors to avoid paying payroll taxes and workers’ comp premiums for them.

Insurance carriers aren’t pleased when a 1099 worker gets hurt on a company’s premises and that worker isn’t covered by their own workers’ comp or the hiring company’s WC. The result may be a costly lawsuit. So, if your clients don’t put a “regular” 1099 worker on payroll and workers’ comp, it may end up costing them in the long run.

What do contractors need to make sure their subcontractors are covered?

Just as we make sure as individuals to keep our health and auto insurance up to date, contractors who use subcontractors on their jobsites should require a valid workers’ comp certificate as proof of coverage. The certificate needs to include the owners if they are performing work on the project. To verify coverage is in force, the contractor should contact the agent listed on the certificate and make sure the policy is paid and current.

Contractors should also encourage the subcontractors to include a waiver of subrogation endorsement (WOS) in favor of the contractor.

What if my client hires a contractor and their employee is injured?

Contracting with an outside company can be a risky proposition for your clients when it comes to workers’ comp. But there are steps that a prepared employer can take.

A WC certificate from vendors or contractors should be in place before any work begins. The certificate covers every worker on site throughout the project.

Injuries are reported to the contractor office and/or risk manager. They speak with the employee immediately to provide treatment directions. Or the contractor sends the employee to the usual treatment clinic, or calls 911, and refers all approvals to the subcontractor and their workers’ comp carrier. Often directions to contractor employees are given and/or posted should an injury occur on the job site.

PEO relationships typically exclude coverage of any individual not identified on a reported payroll. So if a vendor/subcontractor is injured and has no workers’ comp insurance, the PEO’s WC policy is not liable in most states since liability is defined under a CSA (Client Services Agreement), which means the client of the PEO (company and/or owners) are liable under workers’ comp.

To cover the bases, PEO clients who (and who utilize smaller 1099 contractors) under a minimum premium policy or “If Any” policy under a different corporate/owner name where checks are written for payment to cover miscellaneous contractors’ employees who may be hurt on their work site(s).

The reason for a separate name is that states prohibit two workers’ comp policies on the same entity and since the 1099 contractors are not employees, they cannot be added to the payroll of the first company as employees under WC.

Can a terminated employee file a workers' comp claim?

Any ex-employee can file a workers’ comp claim within one year of injury. To avoid these post-employment claims, management is encouraged to hold monthly meetings to ask employees if they have had any injuries and then ask employees to sign a document during the meetings to confirm.

An exit interview can reduce claims by offering the employee a chance to report any incident during their employment including an injury. By signing the form, the employee says that they had no injury when they left the job. So, post-employment claims and their financial impact should be reduced.

If a client hires a family member, can they pay a doctor directly?

An employer can pay for a family member/employee’s injury as long as they report that injury as a claim to workers’ comp and the claim is assigned a claim number.

When employers pay bills “retail,” it typically costs twice as much as a state’s Fee Schedule. The advantage is that paying direct keeps the dollars off the loss run, but your client is protected if the injury leads to a higher dollar-value claim in the future.

Should a minor claim be reported?

All soft tissue injuries must be reported – no exceptions. Very minor cuts can be handled with a band-aid internally and documented on a First Aid log. All injuries except these “band-aid cuts” must be submitted to workers’ comp to avoid penalties imposed by the state. Each state has their own definition of approved first aid. To be safe, stick to the band-aid rule.

Reporting a claim starts the process of control. Cost is contained through standard pricing negotiated with doctors within MPNs. By capturing the claim as soon as it happens, the employee gets treatment early and can head off a bigger problem.

The following real-life example shows why it’s so important to report a claim or file a report. An employee cut their finger and said, “It’s okay, no big deal, it’s nothing.” The cut wasn’t treated and later became infected. As a result, the tip of the finger had to be amputated. A simple visit to the clinic to wash out the cut, apply an antibiotic to the wound and have gotten a tetanus shot, may have not only saved the employee’s finger but also much anguish. In addition it could have saved the employer lots of money as this will have a significant negative impact on the company’s MOD for 3 years.

Moral, never assume an employee’s injury will be okay. Always report.

Insured Solutions has a 24/7 nurse hotline that its’ clients can use to assist them to make a prudent decision regarding further treatment of an injury. Never assume. If an employee refuses treatment, at a minimum, have them sign a waiver stating that refusing treatment is against the company’s better judgment and the responsibility falls on the employee.

Should your client report a workers' comp claim late? If they do, is there a penalty?

Your client should always report injuries or complaints of pain even if they are treated on site. If a band-aid was applied and the employee went right back to work, no claim is necessary, but the incident should be documented in a First Aid log.

Injuries handled offsite, need a First Report of Injury, submitted to the workers’ comp carrier within 24 hours after the employee is hurt.

Claims may be reported late for a number of reasons that have nothing to do with the employer. But as soon as management finds out about the injury, it must be reported to the WC carrier.

To encourage timely reporting, fines and/or penalties are assessed by the carrier and possibly the state and federal DWCsto the employer for reporting late. Regardless of the state, penalties for not reporting an injury other than a “band-aid” injury vary but can run from $2,000 for a periodic late report up to $400,000 in CA for systemic non-reporting.

To avoid late reports from employees, employers should make it clear in their employee handbook that injuries must be reported immediately. It’s difficult to investigate a “stale” accident/injury and ultimately control of that claim’s cost slips out of the employer’s hands.

In the case of an auto accident should an employee file under workers' comp or car insurance?

When an employee is in an auto accident during the “course of employment,” they should file under both car and workers’ comp insurance. Auto carriers will never pay a bodily injury claim on “course of employment” accidents whether the party is at fault or not.

In the case of a car accident, the First Report of Injury is actually the police report and it should be submitted to workers’ comp within 72 hours regardless of whether there seems to be any outward sign of injury. Medical issues can pop up weeks, months or years after an accident, but if a claim isn’t filed the cost to employers can skyrocket if not reported.

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What are the specific variables for different industries and how are they classified?

Rating bureaus assign individual class codes to each industry type. The type of business is classified rather than the duties of the individual employees, and a “governing class” is assigned to that operation. Classifications are important to establish baseline for risk.

Contractors are an exception. Multiple class codes may be assigned depending upon the different types of work the business performs. For instance, a contractor who does drywall installation and painting has both the drywall and painting codes assigned to it.

Three “Standard Exception” codes – 8810 (clerical employees), 8742 (outside sales employees) and 5606 (construction supervisors for contracting operations only) – can be assigned along with an insured’s governing class.

How are workers' comp premiums determined?

To determine an employer’s workers’ comp premium, a calculation is made from several rating elements.

The formula includes the carrier’s manual rate (a dollar amount based on the business class code) per $100 of payroll. This number is multiplied by the experience modifier or MOD. Adjustments are factored in such as premium discounts and scheduled credits or debits applied at the discretion of the underwriter. Finally, state taxes and fees are added to come up with a premium.

What are the costs associated with late claims?

A claim can be late because an employee didn’t report an injury immediately, there may be an attempt to defraud workers’ comp later, or the employee may think that the injury is too minor to report.

But a small cut may turn into an infection later – a common problem with diabetics. If fraud is an employee’s goal, memories fade and there are no reports, so the claim must be taken on faith.

“Quiet penalties” are a deterrent meant to encourage employers to report claims or complaints of pain quickly. In most states, if a claim isn’t received within 7 to 10 days, all medical control is taken from the employer and given to the employee or to the state, which means the employer loses their legal rights.

It’s risky for employers to pay claims out of pocket and not report to WC. An injury can always grow into a massive claim.

Can employees pay part of workers' comp?

Employees cannot pay part of their employer’s workers’ comp. Your client is 100% responsible. If employees want to help keep costs down, they can work safely, follow rules and regulations, report any potential workplace hazards, and immediately report injuries.

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How can your clients avoid workers' comp fraud?

No business wants their WC claim count and dollar amounts to rise, but they especially don’t want to see suspected fraudulent claims ding their WC. Workers’ comp is an insurance program designed to protect and care for employees hurt on the job. So, the burden of proof for fraud always rests with your client, the employer.

The good news is that your clients have tools to avoid workers’ comp fraud. Advise them to 1) implement pre-employment screening; 2) inform new hires about the company’s personal integrity expectations both inside and outside the workplace; 3) establish “medical baselines” to make sure the person hired can do the job they are hired to do; and 4) keep drugs out of the workplace – both legal drugs used illegally and those drugs classified as illegal. These steps are necessary to attempt to “prove fraud” – it is so difficult to do so.

For any prosecution of fraud to go forward, your client must prove intent, which is almost impossible legally. Workers’ cop denials are possible but require documented conflicting statements by the injured employee, written records, investigative reports of witnesses and supervisors, surveillance video(s), questionable medical findings, or co-workers/family reports revealing an employee’s motive or intent. But clients need to realize the even with all due diligence, fraud prosecutions are extremely rare.

Is behavioral testing available to help reduce workers' comp fraud?

Yes, there are tools that can help prevent fraud by eliminating questionable hires before they can commit fraud.

A questionnaire that works as a screening tool is highly recommended for pre-employment to avoid costly workers’ comp claims, to curb potential fraud before it happens, and to avoid safety problems within the workplace. Behavioral testing is the single most effective step that employers can take to avoid fraud. Promoting and emphasizing integrity in the workplace is the other part of the equation.

Integrity screenings can pick up tendencies toward theft, entitlement, drug use, lying and hostility that employers need to address but have a hard time legally assessing on their own. A questionnaire that requires a series of responses is an often-employed tool that can filter out prospective employees before they get on the payroll.

These questions are constructed to draw out behaviors that are red flags to the employer and may be hazardous to other employees in the workplace. The 72-question screening tool that Insured Solutions employs has a 35-year track record and has been a favorite of numerous Fortune 500 companies.

What are the penalties to an employee who makes a false claim?

Workers’ comp fraud is illegal and states levy fines (up to $10k) plus jail time (up to 2 years) to anyone caught lying about an injury. Even though employees can be prosecuted, instances are rare.

Only three states – Illinois, Florida and California – appear to actively go after employee workers’ comp fraud. Of the millions of workers’ comp claims, only a handful – 15-20 – are ever prosecuted in any given year.

As an example, from 1920 to 2010, Georgia administered over 13.6 million WC claims. Using traditional statistics, 20% of those were lost-time based, or those subject to prosecution, and 80% were medical only (MO) – meaning about 272,000 claims could have been investigated for fraud.

Georgia, in that 30-year timeframe, had ZERO prosecutions out of those 270,000 claims. Reason? The state does not have the money to prosecute individuals. But above that – their mission is to protect employees and make employers adhere to the rules of protecting employees, not to go after those they serve.

Since states have no problem going after employers if they fail to meet WC obligations, your clients must protect themselves through the hiring process. If they avoid hiring the wrong person, your clients can head off issues before they happen.

What should a client do if they think a claim is fraudulent?

A paper trail is essential if fraud is suspected. For Insured Solutions’ clients, a tool called a “Red Flag” kit guides them through the process of documentation. The kit is a checklist of what to look for, what to ask, what to document, and how to do it.

When all the information is collected, the client sends the documentation to the carrier adjuster requessting the alleged claim be denied. If the employee has been caught in a documented lie, a strong paper trail goes a long way to validate a denial and if strong enough, to support grounds for pursuing fraud allegations. If the claim is appealed, strategic surveillance may be used if appropriate.

How should your client determine which level of care an injured employee needs?

When an employee is injured, rule number one: if something is broken, if there is a lot of blood or if they are unconscious, they immediately go to the emergency room.

But for minor injuries, employers should use a 24/7 nurse hotline (like Insured Solution’s) to determine level of injury and then direct the employee to the closest approved MPN clinic, emergency room or pharmacy.

Should your client keep human resources in house or outsource HR?

Human resources (HR) is essential to an employer’s workers’ comp survival. The human resources department is the hub for safety knowledge and training. And it serves as a neutral arbiter between employees and management.

Employers look to HR to make sure they hire and retain the right people and to make sure they shed problem employees in the right way. Bad hiring decisions can lead to drug problems, attendance issues, violence in the workplace, and a hostile work environment, which can all impact workers’ comp.

A dedicated HR employee helps with compliance consistency, fosters an open door policy, and helps with day-to-day employee relations. Internal HR professionals know the company’s safety concerns, the clinics to call in case of accidents/injuries, and exactly where to send workers’ comp paperwork in a timely manner.

But when state and federal laws change so rapidly, outsourcing is a smart move. Hiring a dedicated HR professional organization means having a group of experts on speed dial that know various industries and can coach your clients to handle problematic employee situations and other complex HR issues better.

Either way, your clients need to make sure the HR staff they hire are up to the task in the changing and challenging workers’ comp arena.

How does the legal system integrate with workers' comp?

Just as each state has its own unique laws and regulations governing its citizens, so do state DWCs. Each workers’ comp program sets its own legal obligations that the employer must meet. On the carrier side, DWC boards create rules that insurance companies must observe. Carriers train adjusters how to handle these claims.

Even when employers and carriers perform their obligations well, lawsuits can arise from workers’ comp claims. When this happens, the insurance carrier assigns a defense attorney who represents both the carrier and the employer. Doctors determine the medical cost, adjusters calculate lost time, and then expenses are added to determine the amount owed.

Plaintiff or trail attorneys protect employee rights. Defense or carrier/employer attorneys protect carrier/employer rights. The rights of each side are determined by each state.

Regardless of the money finally awarded, the employer must always pay the claim (possibly increasing their MOD). But the defense attorney is there (if possible) to strike a balance between reducing the claim for their client while still being fair to the employee or their family.

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Are employees covered under workers' comp while driving to work?

States disagree on the “driving to work” question. But typically if an employee works at the same place every day and travels back and forth, they are not covered under workers’ comp.

There are exceptions. Each instance depends on the assignment and if the employee is doing anything connected to work.

If your client asks a worker to perform a duty on the way to or from home and an injury occurs, that employee is covered. If a worker leaves home and travels directly to a remote job site or a client’s business, they are covered from the time they leave home.

States are using what could be called the “Google Rule.” If an employee was going from home to a client’s office and had an accident, your clients can calculate the shortest Google map route to get there. Did they take the shortest distance or go a roundabout way to run errands, for instance? If personal time was involved, workers’ comp may not be responsible.

Are employees covered under workers' comp while working off site?

As long as an employee is being paid, they are covered by workers’ comp. So, an hourly worker is covered from the time they are on the clock until the time they are off the clock.

And if your client sponsors an event off property and requires employees to attend, the employees are covered during the event.

Are employees always covered under workers' comp while working on site?

States vary on whether employees are covered in every circumstance while on company property.

Any time an hourly worker is on the clock, workers’ comp kicks in for an injury. But when that employee punches out, WC is typically not responsible.

However, employees are covered by workers’ comp for any reason during company-sponsored events on site if attendance is mandatory. If attendance is voluntary, coverage in not guaranteed, but to make sure, management must make it clear in written communications that attendance is optional.

If drinking is allowed at onsite events, your client must provide transportation – cabs or designated drivers – to help lessen risk. Additionally, if possible, your client should think about banning motorcycles and 3-wheel vehicles from events to lessen risk.

Is an employee covered under workers' comp if an injury occurs on a different business property?

Employees are covered no matter where they are as long as they are on your client’s company business.

If an injury is sustained at a previous employer and it shows up at your client, what happens?

A workers’ comp claim never really leaves its employer/carrier of origin – no matter how much time passes. If the same injury flares up at a new employer (your client), a dollar “apportionment” on the medical costs may occur based on the doctor’s opinion during a court proceeding.

Apportionment means that your client can reduce the amount of benefits to the employee due to a previously paid claim of the same injury on the same body part. However, certain factors have to be met to get an apportionment.

Are remote workers covered under workers' comp?

Yes, remote workers are covered under workers’ comp as long as they were on a submitted PEO payroll and the premium is not in arrears. Under a PEO, the determining factor is: “Did the employer benefit and were the remote workers submitted on a wage report to verify the premium was paid?”

When are lost wages awarded for workers' comp and how are they calculated?

When employees are hurt on the job, they may miss work. As a benefit a portion of their lost wages are paid back to them through workers’ comp.

Lost wages for workers’ comp begin as soon as an employee misses work due to the injury. Some states’ workers’ comp pay lost wages immediately, others within 3 days – while states like Georgia have a 7-day waiting period before payments begin.

It’s up to your client to decide how to pay an employee waiting for workers’ comp to begin. But workers’ comp makes sure the employee never misses a paycheck. The goal of workers’ comp is to ensure that employees don’t suffer loss of income or stability due to a work injury.

Most states pay 67% of regular wages – tax free. Deductions and benefits are not taken out of money awarded to injured workers. An employee off work should not receive both workers’ compensation and wages for the same time period. If they do, the money is taken out on the back end, usually in the case of a claim that is litigated.

When an employee is off work for an extended time, some of your clients may decide to pay employee benefits the entire time. Others may not be able to do so. When this happens, the your client can opt to send a 30-day notice with an invoice by certified mail giving the employee the choice to pay the benefits themselves or risk losing coverage.

Should your client be on offense or defense with workers' comp?

Offense, offense, offense. It is crucial to tell your client to be diligent. It’s the only way your clients can take charge of workers’ comp. By including applicant screening and filtering, return to work programs, instilling and enforcing safety protocols, and reporting claims correctly and completely, your clients can save time and money up front before spending big money on costly workers’ comp claims.

How are benefits handled when an employee dies and who receives those funds?

When an employee dies on the job or his/her death is connected to the job, your client must report the death within 8 hours. They are also required to notify the local OSHA office, which investigates the fatality.

Next of kin should be compassionately notified. Then a human resources representative needs to contact the family as soon as possible to discuss insurance and any other benefits. If grief counseling is available, HR should offer it to employees.

The amount of compensation from workers’ comp varies based on the circumstances. If an employee suffers a heart attack connected with an underlying medical condition, workers’ comp pays nothing. But if the employee has a heart attack at work and then hits her head and dies from the head injury, the death falls under workers’ comp.

Compensation varies by states and amounts differ by family situations. If a worker dies without a spouse or children, their estate may not receive any workers’ comp or may receive a minimum amount for burial expenses, i.e. $5,000. In California, though, even if a single employee dies, the state assesses a $350,000 expense on the WC carrier – a way to offset state insolvency funds from other claims.

But, if an employee has a spouse and 4 children under 18, workers’ comp may feel an obligation to replace the missing wages for the family, especially the children. However, most families litigate when their loved one dies to make sure that their children are cared for all the way through college.

Does payroll administration have to be included to utilize Insured Solutions' workers' compensation insurance programs?

No, payroll administration does not have to be included to use our workers’ comp programs.

Who are our workers' compensation carriers and what are their ratings?

We use different carriers that are A-rated and match your client’s risk and industry needs to the right the program. Feel free to discuss your client’s needs with one of our account managers.

What if the client is not happy with Insured Solutions' program after getting started?

We will do everything possible to insure that your client’s experience is perfect. However, if the client decides that our workers’ compensation program is not right for their business, we require a 30 day notice to exit.

How do you know that your agency and client information is secure with Insured Solutions and its website?

Insured Solutions utilizes SSL Encryption and SAS 70 compliant protocol with 24/7 up time and redundant backups on and off-sight to secure all of your agency and your client’s data.

Who is responsible for the actual client set up on my clients' workers' compensation and payroll programs?

An Insured Solutions client services representative will handle all client set up and training and keep you informed along the way.

Who is good a candidate for Insured Solutions' services?

Alternative Risk clients are a perfect fit for Insured Solutions.

Great prospects:

  • Alternative Risk industries
  • high experience MOD
  • assigned risk pool
  • large or frequent claims
  • clients already using PEOs or pay-as-you-go workers’ comp
  • insurance canceled or not renewed
  • multi-state under a single policy
  • new business; no claims history
  • lapsed policy


The information herein represents 40 years of daily involvement with workers’ compensation during which time legislative laws have and continue to change on a state by state basis. The information herein is NOT legal nor is it intended to represent a legal position. For real-time state-specific guidance, you should consult with your assigned lost-time (carrier) adjuster who is required to have annual state-based re-certification training enabling them to best represent your interest in real time.