OSHA watch

Long-awaited proposed rules to clarify crane operator requirements issued

A proposed rule was published in the May 21 Federal Register. The rule drops the requirement (which never went into effect) that operators be certified for lifting capacity. It also reinstates an employer’s duty to ensure a crane operator is qualified to control the machinery safely.

Comments are due by June 20.
Spring regulatory agenda has some surprises

Several potential standards that were moved off the Trump administration’s main regulatory agenda and placed on a long-term actions list in July 2017 are now back on to the regulatory agenda under the prerule stage, meaning the agency is considering taking action. These include standards to prevent workplace violence in the health care sector, improve emergency response and preparedness, an Update to the Hazard Communication Standard, and a tree care standard.

Also on the prerule list are potential regulations related to communication tower safety and potential revisions to the Table 1 compliance methods in the silica standard for the construction industry. The infectious disease potential rule and a standard to update regulations for process safety management and prevention of major chemical accidents remain on the long-term actions list.
Use of General Duty Clause for heat related violations under review

Use of the general duty clause to issue citations against employers for heat-related hazards prompted an uncommon invitation from the Occupational Safety and Health Review Commission to file briefs by May 14. Then the review commission scheduled rare oral arguments in two cases involving the use of the clause for June 7 – the heat stress case and one against a health care facility for a fatal workplace violence incident.
Enforcement notes

California

  • Four citations and $71,435 in penalties were issued for inadequate lighting and traffic controls to Consolidated Disposal Services LLC, after a security guard at the company’s dumpster yard in Gardena was fatally struck by a truck.
  • UMC Acquisition Corp. in Downey faces $86,615 in penalties for 11 citations after unguarded moving belts and pulleys resulted in the amputation of a worker’s fingers.

Florida

  • Premier Behavioral Health Solutions of Florida Inc. and UHS of Delaware Inc. were cited for failing to protect employees at their Bradenton facility from workplace violence. Proposed penalties are $71,137.
  • Desouza Framing Inc. was cited for exposing employees to dangerous falls at two worksites. The Jacksonville-based residential framing contractor faces penalties of $199,178 for two willful citations of failing to provide fall protection.
  • P&S Paving Inc., a Daytona Beach underground utility construction company, faces $138,927 in proposed penalties for allowing employees to work in a trench without cave-in protection, failing to train employees on trench hazards, and provide a safe means to enter and exit the trench.
  • Orlando-based SIMCOM Training Centers was ordered to reinstate a flight instructor who was terminated after he raised concerns about potential violations of Federal Aviation Administration safety regulations. The company must pay $201,882 in back wages and interest, $100,000 in compensatory damages, and reasonable attorney fees.
  • Douglas N. Higgins Inc., a South Florida utility company, was cited after an employee suffered fatal injuries when a steel plate fell on him as he installed sewer lines at a Naples Park worksite. The company faces $162,596 in proposed penalties, the maximum allowed.

Georgia

  • Oldcastle Lawn & Garden Inc. of Shadydale, a manufacturer of mulch, was cited for exposing workers to amputation, struck-by, caught-in, combustible dust, electrical, fall, fire, and noise hazards. Proposed penalties for the 36 violations are $251,108. The inspection was part of the National Emphasis Program on Amputations.

Kansas

  • Wichita roofing contractor Jose Barrientos was cited for exposing employees to falls and other safety hazards when inspectors observed roofers working without appropriate fall protection at a residential site. Proposed penalties total $191,071 for two willful and six serious violations.

New York

  • A Buffalo U-Haul facility faces $108,095 in fines after a renovation exposed their workers to asbestos and silica hazards.
  • Following a fatal fire, New Windsor-based Verla International LTD, faces proposed fines of $281,220 for failing to protect its employees from dangerous chemicals, and other hazards.

Pennsylvania

  • In response to a complaint of imminent danger, Hua Da Construction in Philadelphia was cited for exposing employees to dangerous workplace safety hazards and faces proposed penalties of $222,152 for multiple violations related to electrical, fall, and struck-by hazards.
  • In a follow-up inspection, Luzerne County employer, Midvale Paper Box Co. faces penalties of $201,212 for exposing workers to safety hazards, including lockout tagout violations, electrical hazards, and forklift training.
  • Strong Contractors Inc., based in Bensalem, faces $110,971 in penalties for exposing employees to falls and failing to provide appropriate eye protection while working at Trinity Baptist Church. The company has been cited 14 times since March 2017.

Tennessee (Tennessee OSHA)

  • Vorteq Coil Finishers LLC in Jackson was issued 12 citations and $57,750 in penalties after an unguarded pinch point resulted in the amputation of a worker’s fingers. Inspectors found that the employer failed to provide machine guarding, train workers on the control of hazardous energy and confined space hazards, and inspect cranes.

Wisconsin

  • For the second time, a Milwaukee battery manufacturer, C & D Technologies Inc., was cited for exposing employees to lead and failing to implement an effective lead management program. The company faces proposed penalties of $147,822 for two repeated and six serious violations.

For more information.

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

Top reasons for serious workplace injuries and large workers’ comp losses

Liberty Mutual Workplace Safety Index

Produced annually, the Liberty Mutual Workplace Safety Index identifies the leading causes of the most disabling non-fatal workplace injuries (resulting in six or more days of lost time) and ranks them by total Workers’ Compensation costs. The top five causes that accounted for 68.9% of the total injuries occurring in 2015 (most recent data available) were: 1) overexertion involving outside source, 2) falls to lower level, 3) falls to same level, 4) struck by object or equipment, and 5) other exertions or bodily reactions.

For the fourth consecutive year, overexertion involving outside sources topped the list, accounting for almost a quarter of the losses, at $13.7 billion per year. This event category includes injuries related to lifting, pushing, pulling, holding, carrying, or throwing objects. Rounding out the top ten are: roadway incidents involving motorized land vehicle, slip or trip without a fall, caught in or compressed by equipment or object, struck against equipment or object, and repetitive motions involving micro-tasks.

These top ten accounted for $52 billion a year in medical and lost wage costs for businesses. While the number of injuries decreased 1.5 percent, the costs increased 2.9 percent. The total cost of all disabling injuries and illnesses was nearly $60 billion per year.

Combined with your company’s worker injury data, the information can help prioritize preventive measures and training needs.

 

Safety National review of high cost claims

When one thinks about high cost workers’ comp claims, it’s natural to focus on catastrophic claims. These claims include severe burns, brain injuries, spinal cord injuries and significant amputations, which are devastating for all involved. According to Safety National’s claims data, five accident causes accounted for 86% of our catastrophic injury claims:

  • 24% – Motor Vehicle Accident
  • 24% – Fall
  • 20% – Struck By
  • 10% – Act of Crime
  • 8% – Burn

Yet, the recent review of Safety National’s large loss claims by Mark Walls, Vice President of Communications & Strategic Analysis, and Stephen Peacock, Assistant Vice President – Claims, found there were significantly more “developmental” claims that crossed the $1 million threshold, used to define “large loss.” Developmental claims are routine claims that continue to develop over time, including back, shoulder and knee injuries. In this review, they represented about two-thirds of all large-loss claims. In many cases, there were opportunities to resolve the claims before they morphed into large losses, yet failure to recognize the loss potential and intervene earlier opened a Pandora’s Box.

Multiple failed surgeries was the most-common reason for escalating costs in these claims, followed by prescription opioid medications. Both catastrophic and developmental claims have extremely long tails and can remain open for 30 years or longer. The data clearly shows that every claim warrants attention and a comprehensive claims management program is critical to preventing routine claims from morphing to large losses.

 

NCCI Annual Issues Symposium – Mega Loss in Work Comp: How Medical and Treatment Advances Affect Life Expectancy

At the recent NCCI Annual Issues Symposium, presenters lauded the incredible medical advances that have enabled seriously injured workers to survive and survive longer and addressed how to improve outcomes related to these so-called work comp megaloss claims. Dr. Michael Choo and Scott Goll from Paradigm Outcomes discussed trends in mega losses (defined as claims with total incurred greater than $1 million) that average $3.2 million an incident in medical costs alone but can have costs up toward $20 million.

An analysis of Paradigm data showed that 51 to 60-year-olds represented the highest percentage of these claims and males surpassed females for accident rates. The leading causes included vehicle accidents, being struck by an object, and fall-slip-trip injuries. Burns and infections were among the most common medical afflictions.

While some of the cost drivers reflect medical advances, such as more frequent replacement of prosthetics with more high-tech components, innovative laser treatment for scars, and long-term care programs for brain and spinal cord injuries, up-charging for certain medical treatments, adverse events following treatment such as hospital infections, and co-morbidities also drive costs.

According to Dr. Choo these factors can best be mitigated with:

  • Expertise: It takes a team to have the knowledge and skills to ensure a high-quality outcome.
  • Experience: People with experience can tell you what works and what doesn’t.
  • Embracing Outcomes: Help providers focus on outcomes rather than optimizing revenues.

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

Update: July 1 deadline for OSHA 300-A electronic data submission

Employers can now begin to electronically report their Calendar Year (CY) 2017 Form 300A data to OSHA. All covered establishments must submit the information by July 1, 2018. Remember, not all establishments are covered by this requirement. To review which establishments need to provide their 2017 data, click here.

Covered establishments with 250 or more employees are only required to provide their 2017 Form 300A summary data. OSHA is not accepting Form 300 and 301 information at this time. Employers can view their submitted CY 2016 Form 300A summary information, but they cannot edit or submit additional 2016 data on this website. According to the OSHA website, the agency is currently drafting a notice of proposed rulemaking (NPRM) to reconsider, revise, or remove provisions of the “Improve Tracking of Workplace Injuries and Illnesses” final rule.

State Plans that have not adopted the rule

While most states have adopted the federal requirements, there are six states that have not or are delaying enforcement: California, Maryland, South Carolina, Utah, Washington, and Wyoming. On April 30, 2018 OSHA issued a press release instructing employers to submit 300A data even if they are in a state that has not adopted the rule. There has been a mixed reaction from the states, but it is generally agreed that Fed OSHA does not have any authority over State Plan employers (only State Plans) and that the remedy for delinquent State Plans is rescinding the approved state plan status, which few expect to happen.

Here is a summary of the responses:

  • California: advised employers to submit 300A data on fed OSHA’s ITA portal
  • Maryland: not requiring employers to submit
  • Minnesota: adopted regulations became effective on May 21, 2018
  • South Carolina: Legislature formally adopted Federal regulation effective May 25, 2018, but are giving employers 6 months to comply (effective date will be November 25, 2018)
  • Utah: instructed employers they may submit 300A data but are not required
  • Wyoming: issued statement confirming rule does not apply to WY employers
  • Washington: issued statement that employers are “still not required to electronically submit data”

Employers in these states may want to adopt a wait and see approach to see what course of action the state in which they operate adopts or how Fed OSHA proceeds on enforcement.

Anti-retaliation provisions

The anti-retaliation provisions of the rule, which became effective December 1, 2016, remain in effect. Essentially, this prohibits employers from discouraging workers from reporting an injury or illness. Employers must inform employees of their right to report work-related injuries and illnesses free from retaliation, which can be satisfied by posting the OSHA workplace poster. An employer’s procedure for reporting work-related injuries and illnesses must be reasonable and not deter or discourage employees from reporting, and the regulation specifically addresses internal injury reporting policies, post-injury drug testing, and safety incentive and compensation programs.

What employers should do

  • Assess whether your establishment meets the reporting criteria
  • Provide refresher training on the requirements
  • Before submitting, audit injury and illness recordkeeping forms
  • Be sure the latest version of the OSHA Rights poster is posted
  • Evaluate injury reporting policies, drug testing policies, and safety incentive and management compensation plans to ensure they do not discourage reporting of injuries
  • If in a state where the rule has not been adopted, stay abreast of both state and federal actions

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

OSHA watch

Silica safety enforcement ramped up at construction sites

Since compliance requirements took effect Sept. 23, 2017, there have been 116 alleged silica violations at companies as of April 17, a Bloomberg Environment analysis of agency records show. The number of violations in the initial six months is likely to increase since it can take up to six months after an inspection to issue citations. A common misunderstanding of Table 1 among small contractors is that using respirators is the first option. Respirators are acceptable protection, but contractors are expected to first change construction methods or tools to reduce the amount of silica that becomes airborne.

Of the 116 silica violations cited, the most frequently mentioned provision was employers failing to measure silica exposure levels (29 C.F.R. 1926.1153(d)(2)(i)). Almost as frequently cited is incorrectly following Table 1’s procedures (29 C.F.R. 1926.1153 (c)(1)), intended to reduce silica exposure. Eighty percent of the cases were classified as serious violations.

Direct final rule revising Beryllium Standard for general industry issued

While enforcement of certain provisions of the beryllium rule began on May 11, the compliance date for the beryllium standard for general industry was extended and certain ancillary provisions in the final rule changed as a result of a settlement agreement with four petitioners.

The direct final rule clarifies certain definitions and provisions for disposal/recycling, along with those that apply in cases of potential skin exposure to materials containing at least 0.1 percent beryllium by weight. The direct final rule will go into effect July 4, “unless the agency receives significant adverse comments by June 4,” according to a press release.

New flier offers steps to keep tractor trailer drivers safe at destination

Developed in concert with the trucking industry, a new flier addresses the most common hazards for drivers after they reach their destination: parking, backing up, and coupling (attaching) and uncoupling (detaching) vehicles.

List of authorized outreach trainers now available online

The website now has a searchable list of authorized Outreach trainers to assist the public in finding authorized instructors for the 10- and 30-hour Outreach classes.

Mid-Atlantic regional construction safety campaign shifts focus to falls

The four-month campaign in the Mid-Atlantic states to address the four leading causes of fatal injuries in construction will focus on falls in May. Caught-in/-between hazards is the focus in June.

Enforcement notes

California

  • Mr. Good Vape LLC of Chino, was ordered to reinstate a former manager and pay $110,000 in compensation after he was fired for claiming the company’s production of flavored liquids for e-cigarette vapor inhalers violated federal environmental law.
  • California Premier Roofscapes Inc. was cited for repeat violations of fall protection safety orders and faces proposed $134,454 in penalties.

Florida

  • An administrative law judge of the OSHRC downgraded a citation issued against Ocala-based Jody Wilson Construction Inc. from willful to serious and reduced the penalty from $49,000 to $2,800, noting the contractor had attempted to comply with the standard, albeit incorrectly.

Georgia

  • In a settlement in a whistleblower case, Jasper Contractors, headquartered in Kennesaw, but performing roofing work in Florida, agreed to pay an employee $48,000 in back wages and compensatory damages.

Massachusetts

  • In a settlement with Lynnway Auto Auction Inc., the Billerica facility agreed to correct hazards, implement significant safety measures, and pay $200,000 in penalties, following a May 2017 incident in which a sport utility vehicle fatally struck five people during an auto auction.

Michigan

  • Grand Rapids-based excavation contractor Kamphuis Pipeline Co. faces proposed penalties of $454,750 for exposing employees to trench cave-ins and other serious hazards while installing water metering pits and lines at a North Dakota municipal project.
  • RSB Construction Services LLC, in Goodrich, faces $147,000 in penalties for failing to train workers on fall hazards, and provide required guardrail, safety net, or personal fall arrest systems for workers on a pitched metal roof.

Mississippi

  • An administrative law judge of the OSHRC affirmed two items of a serious citation issued to Southern Hens after an employee’s partial thumb amputation, but vacated a third item, noting the standard is concerned with the ‘how’ of the lockout procedures, not the ‘when.’ The penalty was reduced from $19,134 to $12,000.

Nebraska

  • Contractor Premier Underground LLC was cited for failing to protect its workers from excavation collapse hazards. The company faces proposed penalties of $46,930.
  • Omaha-based plumbing contractor Gavrooden Inc., doing business as Mr. Rooter Plumbing, was cited for the second time in less than six months for failing to protect its workers from excavation collapse hazards. Proposed penalties are $38,061.

Pennsylvania

  • The OSHRC has reversed an administrative law judge’s decision to vacate a one-item serious citation with a proposed penalty of $7,000, issued against Calpine Corp. because access to the exposure was reasonably predictable.

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

The many lives of an OSHA violation

Last month in the article, Court decision: OSHA not legally bound by five-year look back for repeat violations, we discussed the number of ways a repeat violation can be harmful to employers. When there is a good faith defense, it may be well worth contesting citations, even if they are minor. Here are four more reasons to do so:

In early April, Susquehanna Supply Company, Inc., of Williamsport, Pennsylvania pleaded guilty and paid a $250,000 fine for willfully committing an OSHA violation that resulted in an employee’s death. The employee died when he was working in a trench and one of the vertical dirt walls collapsed, burying him up to his chest and crushing him against the bridge’s concrete abutment. This is a reminder that OSHA fines can have multiple lives.

The highest criminal category that can be pursued against employers for OSHA violations is a misdemeanor. However, a 2015 memorandum of understanding between the Department of Justice and OSHA put some bite into the bark of criminal charges by making prosecution available through other agencies, particularly for violations involving an employee fatality and a willful conduct.

In addition to the possibility of criminal prosecution, there is also the possibility that third parties will use an OSHA citation as evidence of negligence in companion liability cases, a worker will use the intentional tort argument in a personal injury case, or an estate may sue for wrongful death. Each state has developed its own standards through legislation and legal precedent about the use of evidence of OSHA violations and cases have met with mixed success.

In some industries, an employer’s safety record is an important factor in the competitive process for new business. It’s easy to do an establishment search on OSHA’s website or obtain the information from a safety network. Bid documents will often include a question about willful, repeat or serious OSHA citations. The goal should be to reach a resolution with OSHA that will not affect the competitive position.

Also, some states, give workers an increase in benefits if the injury is tied to an OSHA violation. Some examples are:

  • California -An employee is injured by serious and willful misconduct of the employer -award increased by 50%
  • Illinois – An employer willfully violates the state Health and Safety Act (ILCS 225) -award increased by 25%
  • Massachusetts – Employer’s serious and willful misconduct causes injury -award is doubled
  • Missouri – Failure of employer to comply with state statute or order by the Missouri Division of Workers’ Compensation -award increased by 15%
  • North Carolina – Willful failure of employer to comply with statutory requirements or order by the North Carolina Industrial Commission – award increased by 10%
  • Wisconsin – Injury caused by failure of employer to comply with any statute, rule or order of the Wisconsin Department of Workforce Development -award increased by 15%

OSHA citations can be deceptive; there’s a lot more involved than paying the fine and abating the citation. They can lead to additional lawsuits, penalties by other regulatory agencies, failed bids, and increased workers’ comp costs.

Employers must send a notice of intention to contest within 15 working days of receipt of the OSHA notice of proposed penalty. Every notice of intention to contest shall specify whether it is directed to the citation or to the proposed penalty, or both. The decision to contest is a business decision that needs to be carefully weighed.

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

The ten most dangerous jobs

While it is generally known that the highest number of workplace fatalities occur among truck drivers and material moving occupations, the chances of a fatality are much higher in specific industries when the fatal work injury rate, calculated per 100,000 full-time equivalent workers, is used. According to a recent report in EHS Today, the ten most dangerous jobs are:

No. 1 – Loggers

The most-dangerous profession, loggers experienced 91 fatalities in 2016 for a fatality rate of 135.9 out of 100,000 workers, an increase of 33% since 2011, when it was ranked number two. Risks: falls, struck-by, dangerous tools such as chainsaws and axes

No. 2 – Fishers and related fishing workers

Fishermen experienced 24 fatalities in 2016 for a fatality rate of 86 out of 100,000 workers, which was a decline of 29% since 2011, when it was ranked number one. Risks: drowning, struck by lightning, crushed by equipment

No. 3 – Aircraft pilots and flight engineers

Pilots and flight engineers experienced 75 fatalities in 2016 for a fatality rate of 55.5 out of 100,000 workers, a slight drop from 2011. Risks: crashes

No. 4 – Roofers

Roofers experienced 101 fatalities in 2016 for a fatality rate of 48.6 out of 100,000 workers, an increase of 50% since 2011. Risks: falls, struck-by, and heat

No. 5 – Refuse and recyclable material collectors

Refuse and recyclable material collectors experienced 31 fatalities in 2016 for a fatality rate of 34.1 out of 100,000 workers, a decrease of 17% since 2011. Risks: dangerous machinery, crushed by equipment, struck-by, traffic accidents, struck by vehicle

No. 6 – Structural iron and steel workers

Steel and ironworkers experienced 16 fatalities in 2016 for a fatality rate of 25.1 out of 100,000 workers, a slight decrease from 2011. Risks: falls, struck-by, heat, crushed by materials

No. 7 – Truck drivers and other drivers

Employees who drive for work – including truck drivers – experienced 918 fatalities in 2016 for a fatality rate of 24.1 out of 100,000 workers, which is similar to 2011. Risks: traffic accidents, struck by vehicle, other drivers, construction zones, sleep deprivation, texting/talking while driving

No. 8 – Farmers, ranchers, and agricultural managers

Agricultural workers experienced 260 fatalities in 2016 for a fatality rate of 23.1 out of 100,000 workers, a slight decline from 2011. Risks: dangerous machinery, chemicals, heat

No. 9 – Supervisors of construction workers

First-line supervisors of construction trades and extraction workers experienced 134 fatalities in 2016 for a fatality rate of 18 out of 100,000 workers. Risks: struck-by, falls at height and on level, heat, use of large equipment

No. 10 – Grounds maintenance workers

New to the list, grounds maintenance workers experienced 217 fatalities in 2016 for a fatality rate of 17.4 out of 100,000 workers. Risks: heat, cold, noise, chemical exposure, ergonomics-related issues, machinery

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

Court decision: OSHA not legally bound by five-year look back for repeat violations

A recent court decision indefinitely extending the time limitation for OSHA to assess repeat violations has serious implications for employers. The case, Triumph Construction Corp. v. Sec. of Labor, involved a repeat excavation-related citation issued to Triumph Construction Corp. in 2014. A prior citation of the same evacuation standard was issued to Triumph in 2009.

Triumph argued that the repeat citation was not appropriate because the amount of time that had passed from the original 2009 citation to the new 2014 alleged violation was outside OSHA’s stated repeat look-back policy in its Field Operations Manual (FOM), which was three years at the time. Under the Obama administration in 2016, the FOM was updated to expand the look back period to five years.

However, an OSHRC Administrative Law Judge and the U.S. Court of Appeals for the Second Circuit upheld the repeat citation. The court pointed out that neither the Occupational Safety and Health Act nor the regulations OSHA had issued under the Act spelled out any time period that limited the issuance of repeat citations. The time limitation set forth in the enforcement manual “is only a guide” and “is not binding on OSHA or the commission.”

In effect, the ruling means OSHA has the discretion, to go as far back as it wishes to identify any prior substantially similar violations to serve as the basis for a “repeat” violation.

Why it’s important

Repeat violations can harm employers in a number of ways. First, the maximum penalties are ten times higher than serious and other-than-serious violations – $129,336 compared to $12,934. Plus, a violation at one location of a multi-establishment company can be used as the basis for a repeat violation at any other location in a fed OSHA state within that organization, a policy established under the Obama administration that still stands.

Yet, even more important is the way that repeat violations are used. OSHA continues to issue the shaming press releases for significant offenses and that includes repeat violations. Also, it increases the possibility of an establishment being placed into the Severe Violator Enforcement Program (SVEP), where they are publicly branded as severe violators, subject to more inspections, and have no way to get out. Further, it can affect insurance premiums and the ability to compete for contracts.

What employers should do

The best practice, of course, is to avoid OSHA inspections and citations. However, if an inspection occurs and minor penalties are issued, don’t assume that the best course of action is to pay the penalty. The court decision has made it clear that the FOM is not binding on OSHA or the Commission and does not create any substantive rights for employers. If a serious citation is issued and confirmed, the risk of a much more costly and damaging repeat violation exists indefinitely. When there is a good faith defense, it may be well worth contesting the violation.

If a citation is confirmed, employers should be vigilant to ensure that citations regarding the same hazards don’t reoccur.

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.

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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