Workmen's Comp. Costs

By Jayne A. Pearl

Companies that manage claims aggressively can get employees back to work faster--and at lower cost.

While manufacturers across the country are losing money because of yearly increases in worker's compensation claims, a Massachusetts-based makerof men's suits named Grieco Brothersis saving a bundle. The average numberof compensation claims filed by Grieco'sworkers has declined from 73 in 1987 toonly 15 in 1989. During that period, thenumber of days lost due to workers' accidents dropped from 1,769 to 452. Thecompany now spends far less than itused to on insurance premiums.

Grieco hasn't discovered some sort ofmiracle drug, nor has the company's600-person workforce suddenly becomeimmune from medical problems. Thestitchers and pressmen still suffer fromrepetitive motion syndrome and loading-dock workers still lock up with backpain.

The company's savings are the resultof a new policy regarding employee injuries. By taking an active approach tomanaging compensation claims--thatis, carefully monitoring an employee'smedical treatment and then assigninglight.tasks to those still recuperating--Grieco has kept health costs down.

Nationwide, workers' compensationinsurance premiums grow by more than10 percent each year. Anthony Sapienza,Grieco's vice-president of manufacturing and the nephew of the firm'sfounder, says his company's insurancepremiums have decreased by 50 percentsince instituting a so-called "managedclaims" program 18 months ago.

In mid-1989 Grieco hired LynchJones & Associates, a consulting firm,to train its supervisors to manageworkers' compensation cases. Beforeadopting the program, Grieco's managers (like many of their counterpartsat other companies) had a laissez-faireattitude toward injured employees, whowere out of sight and out of mind untilthey returned to work.

A key element of Grieco's aggressive approach to health care was hiring Carol Nolan, an occupational health nurse, who plays several roles. She is first of all an advocate for injured workers. When a serious accident occurs, she accompanies an injured worker to a hospital, makes sure he receives prompt medical attention, and helps him get answers to questions about diagnoses and treatments.

When an injury requires an employee to miss work, Nolan acts as a liaison between worker and employer. She makes weekly telephone calls to injured employees and their physicians, reassuring employees that the company is interested in their condition and eagerlyawaits their return. Nolan mentions thecompany van that takes injured workers to a doctor or physical therapist. Andthe company pays a full-time salanr evenif a worker can return only for light duty.

Nolan also plays the role of mediatorbetween workers and their insurancecompanies. If Nolan receives an independent medical report stating that aworker is able to return to light duty ora less strenuous version of his job, shesends the employee's doctor the reportalong with the worker'sjob description.Even if the physician agrees that lightwork is acceptable for his patient, theworker doesn't have to return to work.However, an insurance company willthen file a court petition to decrease theworker's insurance payments by the amount hewould have earned fromlight or modified duty, oreven to discontinue all benefits except medical costs.When an employee refusesto comply with a doctor's approval to resume working,courts often side with theemployer and its insurer.

Getting a court date,though, can take as long assix months, a period dunngwhich the employee continues to collect benefits. Nolanpoints out that some employees mayget comfortable at home collecting pay-checks and lose their incentive to return to work. Since Grieco began tomanage its compensation claims, how-ever, injured workers generally haveagreed to perform light tasks, theircases are settled much faster, and someemployees with minor injuries haven'thad to miss any work at all.

"A lot has to do with the motivation ofthe person," says Nolan. "Some peopleknow how to beat the system and willtry to do so. But our program has improved morale and made workers morecooperative and more willingto stav in the workplace."

The Department of Laborestimates that five out ofevery 100 American workersare injured on the job eachyear.About80percentoftheinjuries cause moderate backproblems, and one quarter ofthose result in more than sixmonths of missed work. Almost 100 percent of thesecompensation claims end upin court, says Peter Rousmaniere, chief financial officer of Lynch Jones & Asso-ciates. The situation hasbecome a crisis in somestates such as Maine, wherethe country's largest workers' compensation carrier,Liberty Mutual, refuses to issue newcompensation insurance policies.

Preventing accidents is the best wayto keep workers' compensation costsunder control. But when accidents dohappen, the idea is to get people backto work as soon as possible. One out ofevery four moderate back injuries usually results in more than six months oflost time, according toRousmaniere. Then em-ployers such as GriecoBrothers actively manageworker compensationcases, only one in 50 backinjuries causes an employeeto be out of work that long.

States regulate the workers' compensation system,but companies are far frompowerless when it comes tocontrolling their own costs.Here are some key areasthat can help businesses rein in theircosts:

Accelerate diagnosis and treatment. Weeks may elapse between visits to a doctor. Claimants sometimesconsult with several physicians, whomay repeat tests and not be aware of diagnoses or treatments offered by otherproviders. A better alternative is to encourage employees to get treatmentfrom a preferred provider network thattreats compensation cases on a prioritybasis, coordinates treatment, and forwards test results to different specialists. Personnel managers should keepin touch with all doctors involved in acase, making sure everyone knowsabout tests, treatments, anddiagnosesotherspecialistshave made.

A supervisor shouldcontact injured employees and their doctorsonce a week. By showinggenuine concern for injured workers, the supervisor demonstrates thatworkers are valued employees--an important incentive to get a workerback on the job. Talking candidly with doctors isequally important. When a doctor signspapers stating a worker cannot return tothe job for several weeks or months, anemployer can discuss the option of aworker returning earlier to less demanding work.

Get quality medical care. It is in thebest interest of an injuredworker, the employer, andthe insurer to treat medicalproblems effectively,thereby allowing the employee to return quickly towork.

Audit every hospitaland providers' bill for accuracy. Workers' compensation fees are restricted inhalf of the states. Companiesthat are based in those statesshould make sure that everymedical and chiropracticprocedure is within thescheduled fee. Intracorp, aPennsylvania-based disability management and healthcare cost-control company,claims that it found $200 million in errors and overcharges to itsclientslastyear.

Find a vocational rehabilitationprogram. Workers who are so severelyinjured that they can never return totheir old job don't have to accept retraining for a new job, although refusalto do so could affect long-term benefitsif the employer challenges them incourt. One workers' compensation carrier, Liberty Mutual, has its own vocational rehab program in Boston. Itsrehabilitation team--orthopedic surgeons, internists, therapists, nurses, vocational counselors, and a psychologist--provide physical therapy andcareer counseling.

Insurance carriers can recommendsome top-notch programs. For thoseworkers who are self-insured, a third-party administrator can suggest goodlocal programs.

Try to prevent accidents. Insurancecompanies such as Liberty Mutual inspect work sites and recommend waysto improve safety. Finally, consider financial incentives for employees withperfect safety records.

Jayne Pearl is a senior editor of FamilyBusiness.

Rising Compensation Costs
  1984 1989 Change
Average medical cost per claim $2,310 $3,420 +48%
Average cost of lost time per claim $4,202 $5,805 +38%
Average lost workdays per claim 63 75 +19%
Sources: National Council on Compensation Insurance Occupational Health and Safety Agency

Managing the claim

Jones & Associates recommends that supervisors of injured workers take the followingsteps:

Personally escort injured employees to the hospital or doctor. Insist that they be seenpromptly. Ask questions abouta doctor's diagnosis and recommended treatment.

Investigate immediately thecause of an accident and subtmit A written report recommending corrections in workprocedures, equipment, orphysical layout of the plant to prevent accidents in the future.

Contact injured workers atleast weekly and ask how theyare feeling to let them knowtheir colleagues miss them.

Encourage injured workersto return to the plant for lightduty as soon as possible. Likegetting back on a horse afterfalling off, part of the cure of aworkplace accident is returning for modified work. Injuredworkers will therefore not feelforgotten or neglected and canconcentrate on being producltive, not disabled.

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January/February 1991

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