Eight costly claims communication mistakes employers make

Communication is an essential element in realizing business profitability, and managing workers’ comp costs is no exception. When communication suffers and an employee’s injuries are not properly managed, the experience mod goes up, premiums increase, and profits plummet. The sad part is the mistakes are unnecessary and can be easily avoided with knowledge, planning, and little cost.

Here are eight common mistakes:

  1. Only discuss claims with agent at renewal dateWhile many employers focus on the costs of workers’ comp around the renewal date, the window of opportunity to reduce costs has passed, and it is too late to lower the all important experience modification factor. As Kevin Ring, Lead Workers’ Compensation Analyst for the Institute of WorkComp Professionals, pointed out in a Property Casualty360 article, “Communication: the essential element in managing workers’ comp costs,” the critical date is the valuation date, which is 18 months after a policy’s inception and every year after. It’s when the insurance company sends all employee injuries, both paid and reserved to the ratings bureau, which sets the experience modification.

    He cites the case of an employer with an experience mod worksheet showing a $64,680 claim and a loss-run showing the claim valued at $24,940. Understandably, the employer thought there was a mistake. Yet, the claim was valued at $64,680 on the valuation date and was resolved some time later. The $40,000 difference resulted in an Experience Mod several points higher than necessary, costing the employer thousands of dollars.

    If the injured employee returns to work or leaves the job, the employer should ask immediately that the reserve be adjusted to reflect the fact that wages for lost time will no longer be paid. Even for employers with few claims, failure to keep the agent and adjuster apprised of changes in a claim’s status and review claims at least on a quarterly basis is an accelerant to fuel an increase in the experience mod and lower profits.

  2. Failure to provide complete information to adjusterEmployers generally do a good job of reporting the incident, but they often fail to tell the adjuster about other factors that can affect the claim. Some examples are co-morbidity issues such as obesity, diabetes, high blood pressure, and smoking that can exacerbate claim costs and injury durations, previous comp claims, or suspicion of fraud. Also when a third party is at fault for the injury, the employer should provide the claims adjuster as much information as possible to document the liability of the third party, so that subrogation can be pursued.

    As the claim progresses, it’s also important to notify the adjuster of any issues with the recovery and return to work process.

  3. Failure to thoroughly explain the process to an injured employeeFor most injured employees, this is the first time they are in the Workers’ Comp system and their initial reaction may be fear and uncertainty. While they may have received information about worker’s compensation during orientation or training programs, it’s been filed away or forgotten. A written concise and friendly summary of the process can help quell the employee’s fears. At a minimum, it should include:
    • Whom to contact with questions
    • What benefits the employee can expect
    • When the employee will receive benefits
    • What information to provide the treating physician
    • What to do if there is a problem getting appointments
    • How prescriptions work
    • How to return to work
    • The employer’s commitment to helping them through the process

    Conveying the message that the job is here for them and everyone is anxious to see them back, as soon as medically possible, is key.

  4. Failure to stay in touch with injured employeeThe level of communication from the beginning to the close of the claim has a major impact on the outcome. The golden rule is “keep in touch”. Studies have documented that the most important person in this process is the immediate supervisor. Supervisors play a pivotal role in the employee’s perception of the employer’s response. A consistent, empathetic, and encouraging response is critical to avoiding legal intervention and promoting early return to work.

    Social and psychological factors can be major influencers of recovery times. Injured employees might not be compliant with physical therapy if they don’t have transportation, have no one to watch their children, or don’t understand how it will help them recover. Consistent communication helps uncover such things.

  5. Failure to support supervisors in their roleThe supervisors’ response to injured workers holds great weight to positively influence the outcome of workplace injuries and it’s important that employers support supervisors in this critical role. Yet, often training is lacking and there is a failure to involve supervisors in the process. Contact is left to HR or case management, which may not fully appreciate the range of employee emotions that can follow an injury and lead to unsatisfying outcomes.
  6. Failure to recognize impact on coworkersOn the job injuries affect coworkers in a myriad of ways. While the severity of the incident, the circumstances surrounding it, and the direct impact on co-workers’ workloads will govern the type of appropriate response, employers build trust when they recognize that information helps people process events. It’s important workers have a perception of fair treatment, they feel valued, and can trust the organization.
  7. Failure to stay in contact with medical providerThis is one of the most difficult areas for employers. From the outset, the employer needs to be proactive and provide a job description, information on transitional work options and possible job modifications. While state law will govern the level of involvement that an employer can exercise in directing medical care, the goal is to build trust and rapport with the injured employee and provide the best treatment, consistent with occupational guidelines and standard of care. This can only be done by communicating regularly with the medical provider.
  8. Underestimating the effect of language and cultural barriersGlobalization and demographic shifts have reshaped the business environment. OSHA has estimated that 25% of job-site accidents can be attributed to language barriers. Moreover, the Center for Disease Control and Prevention found that fatality rates were 69% higher for foreign-born Hispanic workers than for native-born Hispanic workers. Language training or an appropriate mentoring program can equip supervisors and managers with the skills they need to minimize workplace injuries, as well as facilitate return to work when an injury occurs.

For Cutting-Edge Strategies on slashing Workers’ Compensation Costs visit www.PremiumReductionCenter.com

David Leng, CPCU, CIC, CBWA, CWCA, CRM

Author | Speaker | Certified Risk Manager | Certified Work Comp Advisor

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