Client FAQs
Workers' Compensation 101
Table of Contents
What is workers’ compensation?
Workers’ compensation, often called workers’ comp or WC, is an insurance program that protects employers when an employee 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.*
What are the penalties for not having workers’ comp?
Just say “NO!” Employers should never think they can slide by without workers’ comp.
In the “best” case the employer can expect to pay 100% of the retail cost of the claim instead of the discounted fee schedule price plus all of the legal defense bills.
In the worst case the state can shut down and sell the business when they find out that the employer/owner decided not to protect their employees.
What does DWC stand for?
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 the 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 a company’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 a company does can bring risk to an insurance carrier. 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 claim 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 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 (either dollar or volume) claims 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 an employer can find affordable workers’ comp insurance on the “open market” or whether they need to consider a relationship with a PEO like Insured Solutions.
What is a PEO?
A PEO is short for Professional Employer Organization. Companies partner with PEOs like Insured Solutions and are co-employers of their own staff. PEOs share their tax IDs with the businesses. Since the PEO has a bigger pool of employees (counting all the other employer groups under its umbrella), a business gains 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. Think again.
Any size business receives an equal or better benefit from PEOs – and payroll services are just and 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.
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 employers and giving them the tools needed to succeed. They know that when their clients do well, the PEO thrives.
PEOs provide the coaching, materials, tools and insights – what to do and how to do it – to avoid mistakes that lead to costly claims.
Can owners be excluded from covering themselves on workers’ comp?
Yes, owners can exclude themselves from workers’ comp, but it depends on whether they are classified as a corporation or a proprietorship.
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 an employer 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 employer 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 employers? Due to fee schedules that states set for workers’ comp provider payments, a $1,000 retail medical bill may end up costing $500 due to pre-arranged prices negotiated by states for workers’ comp fees.
But 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.
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?
A waiver of subrogation, commonly known as a WOS, is inserted as a contract clause that waives or 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. With so much litigation, it makes sense to have only one insurer liable for a loss.
As a protective measure, third-party vendors often request a WOS before they begin work with a subcontractor. This important contract clause releases the third-party vendor from insurance liability related to a claim or counter-claim should the carrier find the third party at fault.
For example, DelFoods is the third party that hires subcontractor ABC Construction to do work. ABC Construction may require that their workers’ compensation has a WOS that releases DelFoods from any liability if the insurance carrier thinks DelFoods is negligent in any way.
While a WOS can always be requested, there are often fees associated with adding this clause due to the additional risk the carrier takes on.
Steps of Workers' Comp
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. Every employee has a duty to report an injury that they see.
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. 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.
Employees
If an employer 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 an employer 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 checking legal status of employees.
Employers are fined if they willfully hire and retain workers who are not legally able to work in the U.S. But from the injured worker point of view, a claim is still submitted and processed as usual.
Employee Coverage
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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.
As a contractor, what is needed to make sure 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 can you do if you hire a contractor and their employee is injured?
Contracting with an outside company can be a risky proposition when it comes to workers’ comp. But there are steps that the prepared employer can take.
Employers should always require a WC certificate from vendors or contractors before any work begins. The certificate covers every worker on site throughout the project.
But it’s not that simple. Issues can arise if the owner of the vendor or contracting company is directly engaged in work but has chosen to exclude themselves on the workers’ comp policy (which, by law, they can do) and then they get hurt on the project.
The company that hired the contractor may have assumed that with a certificate the contractor/owner was covered, but assuming doesn’t make it true. Initially, a quick check with the agent who wrote the policy (shown on the certificate) before work begins can establish the certificate’s validity including whether or not the owner(s) are covered.
But checking doesn’t stop there. Employers must also make sure the certificate has not expired and will not expire during the term of the project. Employers should also check periodically (quarterly) to be sure a certificate hasn’t lapsed due to non-payment – don’t rely on insurance carrier notices, they may be slow to send out this information.
If the certificate has expired and there is a workplace accident, the employer hiring the contractor will get dinged for the workers’ comp claim. A little time checking paperwork is much better than filing workers’ comp claims.
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, employers within a PEO using smaller 1099 contractors should think about getting 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.
Claims
If an employer hires a family member, can the employer pay a doctor directly?
Should an employer report minor claims?
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.
Late Claims
Should an employer 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 DWCs to 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.
Auto Accidents
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.
Workers' Comp Costs
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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.
Since penalties are assessed to employers that report claims late, employers should report each legitimate incident quickly. Employers must submit a claim to its workers’ comp carrier within 72 hours of the injury. If they fail to do so, they are quietly dinged with a 40% higher cost penalty for their delayed action.
“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. The employer 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.
Workers' Comp Fraud
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How do you avoid workers’ comp fraud?
No business wants their WC claim count and dollar amounts to rise, but they especially don’t want suspected fraudulent claims to go through 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 the employer.
The good news is that the solution is in the employers’ hands. The most effective ways to avoid workers’ comp fraud is 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” because it is so difficult to do so.
For any prosecution of fraud to go forward, the employer must prove intent, which is almost impossible legally. 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. Even with all this 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, employers must protect themselves through the hiring process. Avoid hiring the wrong person and an employer can head off issues before they happen.
What can you do if you are suspicious of a fraudulent claim?
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 Insured Solutions’ adjuster. The IS adjuster and the insurance carrier work together to see if first, the documentation supports claim denial. 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.
Human Resources
How does an employer determine which level of care an injured employee needs - the ER or the clinic?
When should an employer keep human resources in house and when should they outsource HR?
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.
Law and Order
How does an employer determine which level of care an injured employee needs - the ER or the clinic?
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.
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.
Location of Injuries
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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. 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 a company asks a worker to perform a duty on the way to or from home and an injury occurs, they are 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, the employer 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.
Employees who travel are covered 24 hours a day until they return back to their home. Even if an employee out of town on company business is drinking at a hotel bar and gets injured in a fight – that claim falls under workers’ comp.
And if an employer 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, employers must provide transportation – cabs or designated drivers – to help lessen risk. Additionally, if possible, companies should think about banning motorcycles and 3-wheel vehicles from events to lessen risk.
What can you do if you are suspicious of a fraudulent claim?
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, employers must provide transportation – cabs or designated drivers – to help lessen risk. Additionally, if possible, companies 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 company business.
If an injury is sustained at a previous employer and it shows up at the new employer, 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, a dollar “apportionment” on the medical costs may occur based on the doctor’s opinion during a court proceeding.
Apportionment means that the employer 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?”
Lost Wages
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 the employer 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 employers decide to pay employee benefits the entire time. Others may not be able to do so. When this happens, the employer can opt to send a 30-day notice with an invoice by certified mail to give the employee the choice to pay their benefits before they lose coverage.
Strategy
Should I be on offense or defense with workers’ comp?
Offense, offense, offense. It is crucial as an employer. It’s the only way an employer 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, employers can save time and money up front before spending big money on costly workers’ comp claims.
Death
How are benefits handled when an employee dies and who receives those funds?
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.
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.
Disclaimer
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.