Reducing Workers' Compensation Costs: Tips for a Proactive Employer

1. Reducing Workers' Compensation Costs: Tips for a Proactive Employer Presented by, Moore Ingram Johnson & Steele, LLP Rodney R. McColloch, Defense Attorney rodney@mijs.com | 770-429-1499 Johns Eastern Company, Inc. Simone Logan, Account Manager slogan@johnseastern.com | 941-907-3100

2. Workers’ Compensation Costs • 80% of workers’ compensation dollars are spent on 20% of the claims • How can employers reduce costs?

3. I. Preventing Costs • Easy steps to create defenses • Pre-accident documentation can set up defenses and potential recovery actions that save thousands of dollars

4. Written applicationsshould be required • Obtain employment history • Call references • Don’t expect claims professionals to correct bad hiring decisions once injury occurs

5. B.Post-EmploymentMedical Questionnaires • ADA prohibits asking medical questions of applicants until after job offer • Post-offer questionnaires can set-up: • Rycroft defense

6. Post-Employment Medical Questionnaire • Employers incorrectly assume they cannot ask employee questions about their medical history • For an affirmative defense to claims, it is important and appropriate to ask medical questions

7. Post-EmploymentMedical Questionnaire • Rycroft defense – essential elements: • Intentional false representation by employee regarding physical condition • Employer reliance upon false representation • Causal connection between false representation and injury

8. C. Follow the I-9 Process • Obtain 2 forms of identification • Copy Drivers License/Identification Card • This may assist in Illegal Alien Defense

9. D. Physical Examinations at time of hiring • Establish baseline on medical condition • Uncover non-disclosed medical problems • Drug screens can eliminate dangerous employees before an accident occurs.

10. E. Developing Effective Panel of Physicians: Control medical treatment • Panel allows employer to control medical treatment • At least 8 physicians (no hospitals) • Post in prominent place • Insure employees understand • Function of panel/right to select physician if injured at work • Assistance in contacting panel physician will be given • Best way to insure compliance is to have claimant sign workers’ compensation acknowledgment form and initial panel selection • Open channels of communication with physicians on panel

11. Workers’ Comp Acknowledgment Form

12. F. Documenting Employee Knowledge • Setting up defenses against future claims • Employer must prove employee knowledge regarding: • Entitlement to w/c benefits for work-injury • Panel of Physicians (location/employee rights) • Prompt reporting of accidents • Employer provided safety appliances – document the following: • Requirement to utilize specified appliances • Acknowledgment of training on purpose for proper use of safety appliances • Notice of intentional failure to utilize will result in loss of w/c benefits • Random drug testing (employee refusal could result in termination or loss of w/c benefits)

13. G. Documenting Independent Contractor Relationship • Enter independent contract with subcontractor establishing intent of parties that subcontractor is independent contractor and not employee • Contract shows subcontractor/immediate employer controls • Time, manner, means and method of work pursuant to contract • Subcontractor responsible for providing own w/c benefits (defeats estoppel defense) • Indemnification provision • Check certificate of insurance at the start of each job/ monthly. • Accept certificate of insurance from the agent only!

14. II. Minimizing post-accident costs

15. A. Post-Accident Investigation • Obtain claimant’s statement freezing testimony • Medical condition before accident • Description of accident • Names of witnesses • Description of injuries (keep asking claimant until says “no other injuries” • Names of doctors • Obtain statements from claimant’s supervisor and potential witnesses (freeze their testimony while memory fresh and still employed) • Alcohol and drug testing (8 hrs. for controlled substance and 3 hrs. for alcohol) • Develop relationship with vendor to perform drug testing in hospitals when hospitals refuse • Take notes on important post accident events. • Maintain a separate workers’ compensation file.

16. B. Exploring Potential Defenses • In course of employment • Arise out of employment • Statute of limitations • Notice defense • Willful misconduct • Intoxication • Deviation from employment • Rycroft defense

17. C. Acting Quickly is Important • Timing of denial • Initial payment of benefits or controvert must be made within 21 days of notice of claim • Time to controvert once benefits commenced is 60 days • Controvert only allowed upon meeting newly discovered evidence standard after 60 days from commencement of benefits • Short deadlines make it important to report claims right away so defenses are not waived. • Send any documentation you get from an attorney to the insurance company right way (discovery due within 30 days)

18. III. Managing costs after claim deemed compensable • Continue to be creative in pushing claims • Provide quality medical care • Understand importance of employee returning to work

19. A. Medical Costs • Valid panel is key to controlling costs • Communicate with medical provider • A claimant is entitled to an automatic one time change in physician by law if requested in a compensable claim • Communicate with adjuster

20. B. Offer light duty work • Return to work program • Send copy of light duty job description to authorized treating physician • Get authorized treating physician to approve light duty job • Complete Form WC-240 scheduling claimant to return to work at light duty job, including the following: • Job title • Essential hours • Rate of pay • Hours/days to be worked • Location of job • Time and place claimant to report for work (no earlier than 10 days from date of mailing form to claimant and his attorney) • Mail copy of Form WC-240 to claimant, his attorney, SBWC within 10 days in advance of date claimant is to report to work • Offer pre injury wage if possible • Illegal alien defense

21. C. Keep them in Doubt • Never let claimant or claimant’s attorney know you are showing all the cards even when you are • Attempt surveillance in appropriate cases • Before playing cards give claimant opportunity to lie • Prevents claimant from explaining away activity • Causes claimant to admit employment and engaging in activities inconsistent with restrictions for fear that he was caught in the act on surveillance video • Video itself is “work product” • Make sure and communicate with the investigator and send Drivers License photo, when available

22. IV. Recovering Costs • Indemnification • Subrogation

23. A. Indemnification • Indemnification Quick Tips • Did you pay workers’ compensation benefits when another comp insurer should have been responsible? • Usually occurs when a subcontractor does not have insurance and the general contractor (statutory employer) becomes responsible • As long as claimant should have had coverage through his direct employer, you have a right of indemnification against claimant’s direct employer (subcontractor)

24. B. Subrogation • Subrogation quick tips • The process for recovery of workers’ comp benefits by the insurer if another negligent third party is liable for those benefits • Usually occurs when an employee is injured due to wrongful acts of third party such as a car wreck or another contractor • Only the insurer has the right to seek reimbursement when the liable thirty party has enough money or insurance coverage to completely compensate the injured employee first

25. How does subrogation work? • Determine likelihood of employee becoming completely compensated • Negotiate or file suit • Avoid traps/tricks of the trade

26. Approach to Subro Process Subrogation elements that are universally applicable . . .

27. Identification – the BIG ones…

28. Identification – the not so BIG ones… Spotting Recovery Potential

29. Identification - Injury caused by… • Automobile accidents • Premises liability (unsafe or defective condition on someone else’s property) • General liability (another business’ operation or employee)  • Products liability (a defective product - manufacturer or seller can be pursued) • Criminal acts (an intentional act by another person) • Animal bites • Other

30. Investigation Shift gears… Liability vs Compensability

31. Investigation - Important Points A picture is worth a thousand words A piece of tile fell from above

32. Investigation - Pictures A piece of tile fell from above

33. Investigation - Pictures A piece of tile fell from above

34. Investigation - Pictures Machine caused an injury

35. Investigation - Pictures Machine caused an injury

36. Investigations – Evidence 2. Preserving the Evidence - Be alert to documenting a chain of custody.

37. Investigation – Facts & Follow-up 3. Documenting the Facts 4. Follow-Up Questions

38. Litigation/Negations Leverage Lien Notification Outcomes

39. V. RED FLAGINDICATORSDID AN INJURY EVEN OCCUR???

40. The accident/injury was not witnessed by a coworker • Description of the accident/incident varies from the first report of injury and the medical history received by the initial physician • Details of accident are vague and/or are not promptly reported to supervisor • Injury is not consistent with job duties

41. Injury occurred immediately after a vacation day, on a Monday, or seasonal activity • Claimant is disgruntled, facing firing/layoff, soon to retire, or seasonal work is ending • Claimant has a history of short-term employment • Claimant has moved out-of-state or the immediate area • Claimant is experiencing financial difficulties • Knowledge among employees that the Claimant is active in sports or has another job

42. Claimant requests a change in physician upon receipt of a release to work (Doctor Shopping) • Claimant appears to be getting better until they visit a new doctor and suddenly regresses • Diagnosis is inconsistent with symptoms (malingering)

43. Repeat incidents where the same doctor and attorney are involved together on claims of questionable merit • Injuries are also subjective, such as “pain,” stress, inability to sleep, headaches, nausea, etc.

44. Questions & AnswersRodney R. McCollochRodney@mijs.com770-429-1499Simone Loganslogan@johnseastern.com941-907-3100