Things you should know

NCCI report: National Medicare Set Asides and Workers Compensation: 2018 Update

A new report from the National Council on Compensation Insurance (NCCI), Medicare Set Asides and Workers Compensation: 2018 Update analyzes trends in the submission of Medicare set-asides (MSA) to understand the cost drivers and the medical care of workers injured on the job who are or are likely to become eligible for Medicare based on 11,500 Medicare set-asides.

About 64% of claimants are eligible for Medicare, not because of age but because they have been on Social Security Disability for at least two years. Another 29% of claimants are eligible due to age, and about 7% are likely to become eligible within 30 months. Overall MSAs represent more than 40% of total submitted workers’ compensation settlement costs. More than half of MSA’s involve an attorney.

Estimated future drug costs are the main reason that the Centers for Medicare & Medicaid Services are requiring increases of Medicare set-aside amounts.

New CPWR database shows 42 percent of construction worker deaths involve falls

In a 33-year period, falls accounted for nearly half of all construction worker deaths and more than half of the workers killed lacked access to fall protection mostly in the residential building, roofing, siding and sheet metal sectors, according to the Center for Construction Research and Training (CPWR). The new searchable database includes reports of fatality reports for 768 construction industry fatalities.

ISHN’s annual hand protection update

Industrial Safety and Hygiene News has released its annual hand protection update.

First blood test for concussions approved by FDA

The Food and Drug Administration (FDA) recently approved a blood test to evaluate and diagnose concussions, the first of its kind. This new kind of testing is quick and may reduce reliance on CT scans which can expose patients to radiation.

Up to 21 percent of asthma-related deaths may be from on-the-job exposures: CDC report

Occupational exposures may have contributed to 11 percent to 21 percent of all asthma-related deaths among 15- to 64-year-olds between 1999 and 2016, according to a recently released report from the Centers for Disease Control and Prevention.

Musculoskeletal disorders widespread among plastic surgeons

Nearly 80 percent of plastic surgeons experience work-related musculoskeletal issues or injuries, according to the results of a recently conducted survey of practitioners.

Cyber incidents top list of ten highest threats to U.S. businesses

Allianz’s Risk Barometer 2018 has released its annual survey of risk experts from 80 countries. For the first time, the No. 1 risk in the U.S. (with 45% of the vote) is cyber incidents (moving up from No. 2 last year), with business interruption the largest loss driver after a cyber incident.

Depression and fatigue increase risk of work-related injuries in women: report

A new study in the Journal of Occupational and Environmental Medicine found that women who suffer from depression, anxiety and fatigue are more likely to be injured at work. Nearly 60 percent of women, as compared to 33 percent of men, reported that they experienced a behavioral health condition before they were injured.

State News

Massachusetts

Nebraska

  • The Supreme Court has signed off on changes to Rule 15: Records Checked Out governing the procedures for filing workers’ compensation appeals. It also adopted changes to non-adjudicatory Rules 26, 47 and Addendum 2. View amendments.

New York

Pennsylvania

  • A bill that would have created a drug formulary for injured workers failed to pass the House ending in a split 98-98 vote.

Tennessee

  • The Bureau of Workers’ Compensation has produced a bullet-point summary to help explain the changes to the medical fee schedule rules, which are now in effect.

Wisconsin

  • Employers now subject to tort claims for temp workers’ injuries (see Legal Corner).

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

Legal Corner

FMLA
Adverse actions shortly after medical leave spell trouble for employer

In Schram v. Dow Corning Corp., E.D. Mich., while traveling for business a long-term employee was accidentally struck on the head by another passenger’s luggage, causing a detached retina that required immediate surgery. She had recently changed positions within the company and her new manager asked her to postpone surgery, but she refused and was off work for approximately three weeks. Although no paperwork was filed for FMLA leave, Dow allowed the time off.

When she returned to work, she alleged the manager excluded her for meetings and began questioning her work, moved her office, refused accommodations for ongoing retina issues, and ridiculed her for vision problems in a meeting. Shortly thereafter, she was told her position was eliminated and she found another temporary position in the company for one year and then was terminated. Meanwhile, her former position was filled by a younger male employee with less marketing experience at a salary $40,000 higher than her old salary.

After leaving Dow, she sued alleging retaliation under the FMLA and Michigan workers’ compensation law, as well as disability and gender discrimination under Michigan law. The district court found in her favor, noting the timing of her injury, leave of absence, and her “position elimination” was sufficient to place her retaliation claims before a jury. The judge also found that the assignment of her identical role and job duties to a younger male with significantly less marketing experience could provide sufficient basis for a jury to find in favor on her discrimination claims.
Leave not available for insomnia following death of pet

In Buck v. Mercury Marine Corp., E.D. Wis., a machinist asked for, and was granted, a day off because he was upset that he had had to put his dog of 13 years to sleep. The next day, he called his supervisor and explained he had not been able to sleep since putting his dog to sleep and asked for the day off and was documented for an unexcused absence. The same day, he sought treatment and was diagnosed with “situational insomnia” and the doctor wrote him a note that he was in the clinic for evaluation of situational insomnia. Despite the note, the absence remained unexcused. Over the next three months, the employee accumulated several other unexcused absences that resulted in his termination and he filed suit under the FMLA.

While the court held that inability to sleep caused by the passing of a pet could arguably constitute a “serious health condition,” it noted the employee failed to show that his condition qualified under the act. Other than the one visit to the clinic, there was no treatment, no prescriptions, and the doctor’s note did not say he was unable to perform the functions of his job. Although the company did not provide the employee directly with information about his FMLA rights or provide him a copy of its FMLA policy, it did not mean the company had violated the act, since the act requires employers to provide an employee with notice only “when the employer acquires knowledge that an employee’s leave may be for an FMLA-qualifying reason.”
Other
Supreme Court ruling may mean employees have more time to file state-law claims

While employees can file a single lawsuit in federal court for both federal and state-law claims against an employer, when judges dismiss the federal claims, they can also decline to hear the state claims. The employee can refile the claims in state court, but lower courts have disagreed about how much time employees have to do so.

Federal law provides that state-law claims will be “tolled” or paused while the claims are pending in federal court and for a period of 30 days after they are dismissed-unless state law provides for a longer tolling period. In Artis v. District of Columbia, the relevant state law limitations period had already passed when the employee’s claims were dismissed by the federal judge. The employer, therefore, argued that the worker only had a 30-day grace period to file her claims in state court.

However, the employee argued the tolling period began when the claim was first filed in federal court. In a 5-4 ruling, the U.S. Supreme Court agreed and held that the employee had 30 days plus whatever time had remained under the state statute of limitations when the federal lawsuit was initially filed.
Workers’ Compensation
Landmark decision means employers can face civil penalties for safety violations – California

In Solus Industrial Innovations, LLC v. Superior Court of Orange County, the Supreme Court has upheld the right of prosecutors to seek civil penalties under unfair competition statutes against employers violating work-safety statutes. While the company argued that the state plan for occupational safety and health should govern how employers with work-safety violations are treated, the court sided with prosecutors who argued they were targeting unfair business practices that arose from work-safety violations, not for the work-safety violations themselves. Although the decision is considered a landmark, it essentially validated an avenue that prosecutors have been using to go after unsafe corporate employers for decades.

Grubhub driver ruled independent contractor; judge urges change in gig economy laws – California

When a delivery driver was fired by Grubhub for failure to make deliveries while on the app, he sued for back wages, overtime and expense reimbursement. While he received a fee for each delivery, the company also paid him a minimum hourly rate and, therefore, he argued he was an employee. Grubhub claimed that they are primarily a software development company, not a food delivery service, so delivery drivers are not key to their business and they did not have enough control over their drivers to classify them as employees. Noting the need to update the laws relating to the gig economy, the judge said overall Grubhub did not have control over his work and under current laws he is an independent contractor.

Treatment must be by authorized doctor – Florida

In Hernandez v. Hialeah Solid Waste Department, the treating physician prescribed facet joint injections and the claims adjuster approved, but with a different physician. The 1st District Court of Appeal said the statutes allow an employer to transfer the care of a worker from an attending provider only if the worker is not making appropriate progress in recuperation and the refusal to allow the treating physician to do the injections was “a de facto deauthorization of the doctor” and improper.

Court explains interest rate on benefits when employers unsuccessfully challenge awards – Illinois

In Dobbs Tire & Auto v. IWCC, two employers unsuccessfully contested the award of benefits to two injured workers. The employers paid the awards plus interest, one at 0.11% and the other at 0.13%. The employees contested the rates in different county courts, and one court dismissed the complaint, while the other found the interest rate should be 9%. The cases were consolidated upon appeal.

While the Appellate Court explained that the Code of Civil Procedure Section 2-1303 provides that judgments recovered in any court will draw interest at a rate of 9% per year until satisfied, it only applies “if and when the arbitrator’s award or commission’s decision becomes an enforceable judgment,” because the employer has failed to pay. An employer that makes payment of an award, accrued installments, and Section 19(n) interest before the injured worker files a motion to enforce is not subject to the 9% interest. Section 19(n) provides for interest at a rate equal to the yield on indebtedness issued by the United States government with a 26-week maturity next previously auctioned on the day on which the decision is filed.

After firing an adjuster following a comp claim, insurance company faces ADA and retaliatory termination case – Illinois

In Buhe v. Amica Mutual Insurance Co., a federal judge ruled against an insurance company’s summary judgment in a suit filed by a former adjuster fired after an 11-month, unresolved workers’ comp claim. The adjuster fell off a roof while investigating a homeowner’s claim and suffered injuries to his lower limbs and shoulder, requiring several surgeries and rehabilitation.

The insurance company knew that the adjuster ran a mortgage company on the side.

While he said someone else oversaw the office activities of his mortgage firm when he was injured, an adjuster said surveillance revealed he was working for his own company while collecting workers’ compensation. He filed for bankruptcy but did not include his comp payments, claiming ignorance. He then filed the suit against Amica, asserting claims of discrimination under the ADA when the company allegedly failed to accommodate him, and retaliatory discharge and promissory estoppel, related to his bankruptcy filing. Amica followed with a summary judgment against his claims.

A judge ruled in part against the summary judgment, finding merit in both claims related to the ADA and retaliatory termination: “…A disability leave of absence that an employee seeks as a reasonable accommodation ‘is a factual issue well suited to a jury determination,'” his ruling stated. He also found that “a reasonable jury could conclude that the real reason for the termination was not the violation of company policy but the workers’ compensation claim.”

“Unusual strain” from daily work routine is compensable – Missouri

In Clark v. Dairy Farmers of America, a woman worker who was the shortest worker in the plant broke her rib and doctors discovered she had a lesion near the fracture. Further tests revealed that the lesion was Langerhans cell histiocytosis, a rare malignancy which can weaken a bone to the point where it can fail under a force that is less than normal. While an administrative law judge denied the claim for comp, the Labor and Industrial Relations Commission reversed and the Court of Appeals agreed.

A worker is entitled to benefits if there is “personal injury” that was caused by an “accident.” Although the worker was injured performing her normal job duties, this time was unusual because she felt and heard a pop in her chest and she could not raise her right arm.

Treating physician’s opinion does not have to be given greater weight than others – Missouri

In Blackwell v. Howard Industries, the Court of Appeals ruled that a worker who suffered an elbow injury and who refused to participate in physical therapy (PT) sessions was not entitled to permanent total disability benefits. The Court of Appeals noted the worker received varying levels of treatment, evaluation and medical records reviews from at least 15 different physicians.

All of the doctors, except for the treating doctor, concluded that the best form of treatment was PT. While a treating physician’s opinion is “of great import,” the court said, “the commission is not required to abide by it or required to give it any greater weight than other physicians’ opinions.”

Employer does not have to pay for “unfamiliar and undocumented” treatments – Nebraska

In Escobar v. JBS USA, the Court of Appeals ruled that a worker was entitled to temporary total disability benefits for a back injury but said the compensation court had erred in determining which medical bills the employer had to pay. A tenderloin puller, the worker allegedly injured his back and received treatment from an onsite nurse but continued to complain of pain and saw several doctors, with one stating that the subjective back pain was out of proportion to the physical examination.

The compensation court determined that he suffered a compensable back injury and that he was entitled to temporary total disability benefits. However, the Court found that the compensation court ordered payment for “unfamiliar and undocumented” treatments that were not clearly related to the work injury.

State has jurisdiction for resident injured while working for out of state employer – New York

In Galster v. Keen Transport, an appellate court ruled that the state workers’ compensation system had jurisdiction over a resident’s claim for an out-of-state accident while working for an out-of-state employer. A trucker who resided in New York worked for a Pennsylvania company, making deliveries of highway construction equipment all over the U.S. He injured his shoulder while shifting equipment in his trailer in Illinois.

After his injury, the company secured medical care for him in New York, as well as a light-duty job. The trucker filed a comp claim in New York, while the company filed one in Pennsylvania and contested the New York claim. The Appellate Division’s 3rd Department affirmed lower court decisions, noting New York has jurisdiction over a claim for an injury occurring outside the state where there are “sufficient significant contacts” between the employment and New York.

Compensation for exacerbation of pre-existing fibromyalgia denied – New York

In Park v. Corizon Health Inc., a worker was exposed to pepper spray while working in a prison when a guard discharged a canister to subdue an inmate. She sought medical care for her symptoms, returned briefly to work, and then took off almost one year. She filed a claim, asserting that her exposure to pepper spray had exacerbated her pre-existing fibromyalgia.

The Workers’ Compensation Board overturned the award by a workers’ compensation law judge, finding there was no causal connection. The Appellate Division’s 3rd Department said the board determines the factual issue of whether a causal relationship exists, and its determination will not change when supported by substantial evidence. The court noted there was conflicting medical testimony, there is no known medical cause of fibromyalgia, and that its symptoms are fleeting and vary considerably among individuals. Therefore, the Board’s decision to credit the opinion of the IME rheumatologist over that of the other physicians was entirely reasonable.

Construction worker receives comp for repetitive lifting injury – New York

In Garcia v. MCI Interiors, an employee worked as a plasterer in the construction industry for over 30 years. He filed a comp claim asserting he had suffered injuries to his neck and back from his repetitive heavy lifting. A neurosurgeon and the treating physician found that his chronic back pain was caused by “repetitive use at work.”

The Appellate Division’s 3rd Department said that a worker can establish an occupational disease by demonstrating a recognizable link between the medical condition and a distinctive feature of employment and with no contradictory medical evidence, the worker had succeeded in doing so.

Commission must review its denial of benefits to worker in light of recent Supreme Court ruling – North Carolina

In Neckles v. Harris Teeter, a meat cutter injured his hip, back, and arm at work and a functional capacity evaluation revealed that he would not be able to return to his job. A vocational rehabilitation specialist reported it would be “difficult” for him to secure a job in an open job market because of his limited work history, transferrable skills and age.

A few years later the company filed a motion asserting that the worker was no longer disabled. The Court of Appeals reversed the ruling of the Industrial Commission, which said the worker had not met his burden of proving that it would be futile for him to look for work. When appealed to the Supreme Court, it ordered the matter remanded to the Court of Appeals for reconsideration in light of the 2017 decision in Wilkes v. City of Greenville. In Wilkes, the Supreme Court ruled that a worker who can demonstrate a total incapacity for employment because of physical and vocational limitations does not also need to show that a job search would be futile. The Court of Appeals noted the case has to go back to the commission to make specific findings addressing the worker’s wage-earning capacity in light of his pre-existing and coexisting conditions.

Commonwealth Court ruling denying benefits for mental injury is published – Pennsylvania

The ruling in Frankiewicz v. WCAB (Kinder Morgan) denied benefits to a chemical operator for a psychiatric injury from exposure to a diesel fuel leak. Under state law, a claim must involve a combination of physical and mental injuries in order for mental injuries to be compensable, unless the mental injury was the result of exposure to “abnormal working conditions.” In this case, it was found that the worker only experienced transient symptoms that did not constitute a physical injury. These included headache, nausea, violent vomiting, choking, a runny nose and watery eyes after he was exposed to a discharge of diesel fuel from a plant a mile away. Following the incident, he began to suffer from panic attacks, anxiety and depression and doctors agreed the exposure had caused a mental injury.

The courts determined that he did not prove that he had been exposed to an abnormal working condition and the “transient” physical symptoms were insufficient to support an application of the physical-mental standard.

Failure to undergo surgery does not warrant shift in liability from employer to the Second Injury Fund – Tennessee

In Tankersley v. Batesville Casket Co., a long-term employee injured his arm and shoulder and surgery was recommended. However, the worker had congestive heart failure and decided not to undergo surgery. He returned to work with restrictions but eventually was laid off because the company had no work within his restrictions. A vocational counselor determined he had no transferrable skills and was 100% vocationally disabled because of the restrictions.

When a judge apportioned 90% of the liability for the award to the company and 10% to the state’s Second Injury Fund, the company appealed arguing the disability was caused in large part by pre-existing medical conditions. The court found that the ruling was based solely on the arm and shoulder injuries and the vocational counselor’s findings were based on the restrictions, thus the evidence did not preponderate against the trial judge’s apportionment decision.

Temp workers can choose to sue or apply for workers’ comp – Wisconsin

In Ehr v. West Bend Mut. Ins. Co. (In re Estate of Rivera), the Court of Appeals issued a decision that temporary workers have the right to file a suit against their temporary employer if they do not make a workers’ compensation claim. The case involved Carlos Rivera, a temporary employee of Alex Drywell, who was killed on the job in a one-car accident. Assigned to work for Alpine Insulation, Rivera was in an Alpine-owned vehicle, driven by an Alpine employee when the car crashed. The Alpine employee was later found to be at fault in the accident.

His estate filed a wrongful death suit against Alpine and the insurance company rather than claim death benefits under workers’ comp. The appeals court overturned a lower court and said that the exclusive remedy portion of the Workers’ Compensation Act doesn’t bar a temporary employee from bringing a claim against their temporary employer, if they had not made a claim for compensation, even if they were a “loaned employee.” The court determined that his estate could not bring a suit against Alex Drywall but was free to bring a suit against Alpine since Alpine was not technically his employer.

It’s expected that the case will be appealed to the Supreme Court.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

OSHA watch

Enforcement of the Beryllium standard delayed two months

To ensure that stakeholders understand their obligations and there is time to provide consistent instruction to inspectors, the enforcement date of the rule lowering occupational exposure to beryllium has been pushed back to May 11, 2018 from March 12, 2018.

Budget justification reveals upcoming regulatory actions

According to the congressional budget justification, a revised final rule on beryllium in the construction industry and shipyards will be released prior to FY 2019, which begins October 1. The agency also is set to issue revisions to its Recordkeeping rule and Respirator Fit Testing Procedures (1910.134 App A) in FY 2018, as well as a proposed update to its Hazard Communication Standard (1910.1200) to align it with the current version of the Globally Harmonized System of Classification and Labeling.

Another long-awaited proposal to revise the crane operator certification requirements in the Cranes & Derricks in Construction Standard (1926.1427) is on the horizon, as is one to include ANSI Consensus Standards in OSHA’s Powered Industrial Trucks Standard (1910.178).

THE Standards Improvement Project IV, including LOTO, is scheduled to be completed in FY 2018.

Inspection goals

With a target goal of 30,840 inspections (1,556 fewer than in FY 2017), inspections will focus on “the highest-impact and most complex inspections at the highest-risk workplaces.” The FY 2019 proposed budget by the Trump administration is the same as the agency’s current budget and includes an addition of 42 new fulltime employees for enforcement and 32 for areas such as compliance assistance, outreach, and the Voluntary Protection Programs.

Standard interpretation of cold compression therapy as medical treatment beyond first aid

While several individual components of a cold compression therapy device are included on the list of first aid treatments, physical therapy is considered medical treatment. In response to a letter about a cold compression therapy device that uses cold therapy, non-rigid wraps, and compression to treat an injury, a standard interpretation was issued that found cold compression therapy devices are medical treatment for purposes of recordkeeping requirements.

New publications on tree care and silica offer worksite safety solutions

Solutions for Tree Care Hazards highlights common hazards in the tree care industry and provides safety measures for employers and workers.

A revised fact sheet that summarizes the major requirements of the respirable crystalline silica standard for general industry and maritime is now available.

 

Enforcement notes

California

  • A-1 Roof Management and Construction, Inc., in Novato, faces $80,620 in fines for exposing workers to fall hazards from unprotected floor openings and failing to install barriers near skylights. A worker suffered serious injuries after he fell 23 feet through a skylight.
  • Napa-based Gorilla Tree Service was cited for $23,200 for serious workplace safety violations following an investigation of an accident that killed a 24-year-old worker.

Florida

  • An administrative law judge of the Occupational Safety and Health Review Commission (OSHRC) affirmed citations issued against Fort Walton Beach-based Elmer Cook Construction Inc., but lowered the assessed penalties to $2,100 for each violation, noting the company’s small size (4 employees) and because there was no evidence of a history of violations.

Georgia

  • Dalton-based, First Source Worldwide LLC, faces $256,088 in penalties for willful citations for failing to install a fall protection system, and develop and implement a written permit-required confined-space program as well as other violations relating to machine guarding and PPE.
  • Thomson-based auto parts manufacturer HP Pelzer Systems Automotive Inc. was cited for safety violations and proposed penalties totaling $129,336 after an employee suffered a finger amputation.

Illinois

  • Manuel Gallardo, owner of Gallardo’s Construction Services based in Palatine, faces $281,286 in proposed penalties after inspectors observed employees exposed to fall hazards on six Chicago-area residential roofing projects between August and November 2017.

Massachusetts

  • A Beverly-based general contractor, A.C. Castle Construction Co. Inc, argued it was wrongly held responsible for the acts and omissions of a subcontractor, the sole proprietorship of Daryl Provencher. However, an administrative law judge of the commission determined that the subcontractor and A.C. Castle “acted as a single employer in the worksite” and that Mr. Provencher “was a supervisory employee working for A.C. Castle.” The decision was upheld by the Appeals Court.

New York

  • Carthage Specialty Paperboard Inc., has reached a settlement agreement to improve efforts to prevent safety and health hazards in their Carthage facility after being cited for 62 health and safety violations in June 2017. The company will pay $175,000 in penalties.

Tennessee

  • An administrative law judge of the OSHRC vacated a safety citation and $5,000 in penalties issued against a barge building facility in Ashland City operated by Trinity Marine Products Inc. after determining that regulators failed to prove the technological and economic feasibility of engineering and administrative controls of airborne pollutants.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

HR Tip: ABA’s summary of 2017 FMLA cases

Every February, the American Bar Association’s (ABA) Federal Labor Standards Legislation Committee publishes a comprehensive report of FMLA decisions handed down by the federal courts in the previous year. This handy report summarizes every FMLA decision from 2017 in a user-friendly manner.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

Prequalifying your business can be money in the bank

Companies are constantly looking for ways to give themselves a competitive advantage. Often times, it’s their Experience Modification Factor (MOD). It’s easy to overlook since employers tend to be somewhat uninformed when it comes to Workers’ Compensation. Although it’s certainly a significant employee benefit, on one hand, it’s also a powerful business benchmark that is carefully scrutinized by possible business partners.

The MOD is the biggest driver of a company’s workers’ compensation rates; the lower the MOD, the lower the rates. Therefore, companies with lower modifiers have a lower productivity cost structure, which makes them more competitive and profitable by securing more jobs. The exact opposite is true as well; a higher MOD leads to higher costs, and makes it more difficult to compete. However, there are more dire consequences for those with high MOD’s – no work.

Let’s face it. Companies and risk managers are using the MOD as a significant determining factor to disqualify firms from bidding on projects. If an experience modifier is over 1.00, the company may be viewed as unsafe, and, therefore, does not get the job. Companies know they must do something about their MOD, but don’t know what to do. The good news is that the MOD is as manageable as any other business function, as long as people are motivated to do so.

Here are a few examples of what we’re talking about:

  • A machine shop with a 1.3 MOD six years ago has seen it drop to 0.745, which is the third-best in PA within its classification, out of 228 companies. Before implementing changes to improve their MOD, they were unable to receive a multi-million-dollar contract, even as the low bidder, since the purchasing company’s risk manager viewed them as an unsafe company and questioned the quality of their work. They now have been able to win that contract and have grown from 58 to 110 employees.
  • An asbestos abatement and insulation contractor had a 1.02 MOD, barely above 1.00. Despite being low bidder, they were unable to receive 11 jobs in a three-year period because they were “disqualified” as “unsafe”. The contractor could not qualify for private work and, therefore, had to try and compete in the very low-profit margin, highly competitive government arena. Working with the owner to implement a “zero-accident” safety culture and adding processes to address lost time injuries, within three-years, the contractor had one of the best modifiers in the state. Recently, they were even asked to take over a job from a contractor who was thrown off of it because the contractor’s MOD went over 1.00. The company went from barely surviving, to thriving.
  • A 55-employee cable and fiber optic line installer with a 1.65 MOD was informed by the telecommunications company that they had two years to be in compliance with their safety guidelines, which included a requirement of a MOD less than 1.00. Since the telecommunications company represented 90% of their work, losing the contract most likely would put the company out of business.

    Step one was working with the contractor and the telecommunications company. The contractor was given an extension to four-years, but they had to hit benchmarks in terms of number of injuries that would be verified through loss runs from their insurance company and their OSHA logs. The second step was putting in an aggressive behavior-based safety program as their injury frequency had to be cut by 60% to be in compliance in the first year, and 80% in two years. Based on their results, they were compliant and actually went 19 months without an injury. They will be in compliance with a MOD below 1.00 in three-years as well and are looking forward to bidding on work from other telecommunication companies now.

Each of these companies is far better positioned to compete by improving its Workers’ Compensation performance.

With such striking results, what keeps companies from achieving stellar performance? Our experience points to two primary factors:

  • Lack of owner support and commitment to improving the organization’s operations. This includes difficulty in scheduling training sessions, meetings consistently being canceled and an overall company culture that is driven primarily by the owner’s unwillingness to change, focusing on productivity issues only, or having “too many irons in the fire”.
  • The insurance company’s reluctance to support an appropriate claims management process. Claims adjusters often feel threatened by a consultant’s claims management staff and avoid communicating with them. Unfortunately, any insurance company can have “unseasoned” adjusters, who don’t fully understand the Workers’ Compensation laws and don’t have any “skin in the game”.

But it doesn’t need to be this way. Things can go right under the right conditions:

  • Obtaining the full support of owner and executive management staff to implement cultural changes within an organization.
  • Appropriate consultants are given the time necessary to conduct specific training programs with front-line supervisors and implement necessary policies and procedures.
  • Conducting a comprehensive loss trending analysis to identify those losses that are driving the company’s claim frequency and severity. Then, with an evaluation of the findings, develop and implement processes to change the negative culture that is driving both claims frequency and severity.

There are a number of significant factors that help transform a company’s culture:

  • Management commitment is the most important factor in changing the attitude of the workforce. Management commitment is the first and most important thing.
  • Next is installing the necessary elements to achieve the desired results. Usually, business owners fail to recognize the impact accident costs have on the business. This is why they need to see the data to understand that injury prevention and injury management are 100% controllable expenses. Since these are employee costs, it starts with hiring, training, and monitoring employees for continuous improvement: Plan, Do, Check, Act.
  • Since companies differ, it’s critical to gain an understanding of how to formulate a plan that produces the desired results.
  • Another important consideration in the whole process is that all companies are different, both culturally and functionally. Identifying these differences in the early stages of engagement is important in order to formulate an effective plan to achieve the desired results. This includes developing standardized operating procedures and then conducting training in hiring, accident investigation, workplace inspections, audits, etc.

All of this is anything but an academic exercise. It’s the process of creating a happy, productive and injury-free workforce, along with a business that is successful because it has a competitive advantage that makes it attractive to customers.

And behind it all is the Experience Modification Factor. The MOD is used rather than OSHA Recordable and DART (Days Away, Restricted Time) rates by risk managers as a benchmark. Unlike the OSHA log, third parties promulgate the MOD, such as the state Workers’ Compensation rating bureau and insurance companies that create and provide the data, which are viewed as reliable sources.

Unfortunately, however, the MOD is subject to the severity of claims or even a single large claim, where frequency (the number of injuries adjusted for individual size for comparison) may be a better indicator as to safety performance. However, many risk managers view these records as unreliable, feeling that they can be altered by a company. As a result, the modifier is viewed as a reliable basis for review.

The bottom line is clear: making a diligent effort to get a company’s Experience Modification Factor to the lowest allowable level may determine whether a company gets a job or not.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

OSHA’s removal of the term “unexpected energization” from the LOTO standard likely to lead to more citations

Under the Obama administration, OSHA began an effort under the Standards Improvement Project 4 to fix minor, noncontroversial issues in several existing regulations, including the lockout/tagout regulation. While these issues typically include correcting typos, eliminating redundancies and clarifying vague language, the proposal to remove the term “unexpected energization” from the lockout/tagout regulation is a significant change, according to many experts.

There was a 6th Circuit court case in 1996, Reich v. GM Delco interpreting the term “unexpected energization” that is used in the standard. Employers have relied upon this decision for over 20 years. In this case, the court found that alarms and flashing lights provided sufficient warning of a machine starting up and removed the risk of unexpected energization and overturned the willful lockout/tagout violations.

In so doing, the court noted that the standard “unambiguously renders LOTO inapplicable where an employee is alerted or warned the machine is about to activate.” It went on to say that it applies “where service employee is endangered by a machine that can startup w/out employee’s foreknowledge.” It is not unexpected if:

  • Alarm gives clear, audible, timely warning
  • Controls located so servicer is necessarily aware of start-up
  • Equipment unplugged & exclusively controlled by servicer

Experts postulate that the change will result in more citations because it removes one well known method of addressing hazardous energy. OSHA also is scheduled to complete its Standards Improvement Project IV in FY 2018.

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Getting LOTO wrong is costly: Here’s how to get it right

Many companies believe they are in compliance with OSHA’s Lockout/Tagout (LOTO) standard; yet, it is one of the most difficult to comply with and is the number five violation in general industry and construction. To give you an idea of the standard’s complexity, a compliance directive to explain the enforcement policy and inspection procedures for compliance officers is 136 pages long, whereas the standard is only a few pages.

An increased focus on violations of Lockout/Tagout (1910.147) and Machine Guarding (1910.212, .213, .217, and .219) began in 2006 with the Amputations National Emphasis Program (NEP). This became even more pronounced when OSHA changed the requirements for reporting work-related fatalities and severe injuries in 2015. Employers must report any in-patient hospitalization, amputation or loss of an eye within 24 hours of learning of the incident.

When an amputation is reported, it’s almost certain that an inspection will take place. In 2017, more than 10% (3,596) of all OSHA inspections were under the Amputations NEP, 75% of which were in manufacturing, and 1,247 were triggered by employer reports.

What’s important to note is that this resulted in 7,850 citations, including 302 willful and repeat violations, which carry maximum fines of $126,749. The proposed total cost of the citations is over $55 million. In addition to the potential for costly fines is the even more ominous possibility of being placed in OSHA’s Severe Violators Enforcement Program (SVEP).

One of the criteria OSHA uses to place an employer in the SVEP is 2+ Willful, Repeat, or Failure to Abate violations related to high emphasis hazards. There are only nine high emphasis hazards and amputations is one of them. According to a Conn Maciel Carey PLLC webinar, 68% of the SVEP cases fall under this qualifying criterion.

When OSHA puts an employer in the SVEP, it issues a press release before employers can contest the citation(s). This can have a negative impact on recruiting employees, obtaining bids and permits, and be devastating to a company’s reputation. Moreover, there are mandatory follow-up inspections, inspections at related facilities, and corporate-wide abatements. It’s not a place employers want to be – once designated as a severe violator, there is no clear-cut method for getting out of the program. And it’s not only large employers that are affected. Small employers make up the majority, with about 75% having 100 or fewer employees and roughly 55% having 25 or fewer employees.

Lastly, LOTO is among the most frequent OSH Act criminal violations.

What employers get wrong

When OSHA conducts an inspection, it’s relatively easy to spot LOTO violations. In 2017, the most frequent standard section cited was related to machine-specific procedures: 1910.147(c)(4)(i) – procedures shall be developed, documented, and utilized for the control of potentially hazardous energy. Employers that are cited often misunderstand the scope of activities covered by LOTO. They often focus exclusively on electrical hazards, but the standard covers a broad range of energy sources, such as mechanical, hydraulic, pneumatic, chemical, thermal, or other types of energy.

The program must include written equipment-specific LOTO procedures for all equipment, including vehicles such as forklifts and trucks, with hazardous energy sources and must include all energy sources. While it is possible to group equipment and machinery that have the same hazardous energy sources and the same or similar methods of controlling the energy, some employers do not understand the criteria for grouping that is set forth in section IX of OSHA’s compliance directive, or may neglect to list all covered machinery in the scope of the energy control procedure.

In some cases, employers neglect to document key elements of the procedure. There are also specific rules that apply when a contractor services the machinery and noncompliance leads to citations.

Employers and employees may mistakenly believe a procedure falls under the minor servicing exception. The standard contains specific criteria that must be met for the minor servicing exception to apply and all elements must be satisfied for an exception. Other common mistakes include not updating the procedures when changes occur, applying the construction rather than general industry standard, and overlooking facility support and operational equipment, such as HVAC machinery, boilers, and compressors.

The second most frequently cited standard is 1910.147(c)(6)(i) – the employer shall conduct a periodic inspection of the energy control procedure at least annually to ensure that the procedure and the requirements of this standard are being followed. In this case, annual means every twelve months. Some companies have the wrong person conducting the inspection. It must be an “authorized employee” other than the workers utilizing the lockout/tagout procedure being inspected.

If machines are grouped together the inspection must be of a representative number of employees implementing the procedure. “Representative” is subject to interpretation, so it’s important to have a rationale for the number chosen (complexity, older procedure, etc.). Moreover, the outcome of the inspection must be reviewed with all authorized employees as part of the periodic inspection. Employers also must “certify” that the inspections include the machine or equipment on which the energy control procedure was being utilized, the date of the inspection, the employees included in the inspection, and the person performing the inspection. And inspections must take place for each one of the LOTO procedures.

The third most cited standard is 1910.147(c)(1) – The employer shall establish a program consisting of energy control procedures, employee training and periodic inspections to ensure that before any employee performs any servicing or maintenance on a machine or equipment where the unexpected energizing, startup, or release of stored energy could occur and cause injury, the machine or equipment shall be isolated from the energy source and rendered inoperative.

A written lockout procedure is not required when a machine only has one energy supply that’s easy to identify and lock out. The machine can’t have any potential for stored energy and locking that one energy isolating device completely de-energizes the machine. Even if an employer uses an outside contractor for servicing and does no in-house servicing, a LOTO program is required because there are affected employees.

Fourth is related to training. 1910.147(c)(7)(i) – The employer shall provide training to ensure that the purpose and function of the energy control program are understood by the employees and that the knowledge and skills required for the safe application, usage, and removal of the energy controls are acquired by the employees.

Employers do a good job of training authorized employees, but sometimes overlook affected employees (who operate equipment being serviced) and all other employees who may be present in areas where LOTO is utilized, including management. Also, temporary employees often are forgotten. Another common problem is failure to develop “Group Lockout” procedures when more than two employees service a machine or to require use of a Group Lockout device.

Other common citations include wrong use of locks, wrong use of tags, and working under someone else’s lock.

Complying with OSHA’s Control of Hazardous Energy policy is difficult and the consequences for violating the regulation can be severe. Proposed changes in the regulation (see next article) may lead to more citations. An effective program will reduce the potential for employee injury as well as regulatory liability.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com