Fisher & PhillipsLLPATTORNEYS AT LAW
Solutions at Work®
Atlanta · Charlotte · Chicago · Cleveland · Columbia · Dallas · Denver · Fort Lauderdale · Houston · Irvine · Kansas City · Las Vegas · Los Angeles
Louisville · New England · New Jersey · New Orleans · Orlando · Philadelphia · Phoenix · Portland · San Diego · San Francisco · Tampa · Washington, DC
www.laborlawyers.com
Presented by:Steven M. Bernstein, Esq.
(813) 769-7513
Containing the Cost of Workers’ Compensation
ORIGINS OF WORKERS’ COMP
Instituted by States at Turn of Century• Job safety was a major problem• Employers were constantly in court• Workers' Comp was seen as a way out
– Means of feeding family and paying medical bills
– Means of spreading the risk & reducing litigation
• Employers welcomed the exclusion
A CENTURY LATER
The System Has Turned Into a Monster• By all accounts, it is out of control• Entitlement/lottery mentality• Cottage industries• Talk of legislative reform goes nowhere
THE COSTS
Fastest Growing Labor Cost in the Country
• Estimated at $100 billion/year
• Costs doubling every four years
• Premiums rising 10% every year
• 40% of payroll costs in construction
• 15% of payroll costs in manufacturing
MOST COSTS OCCUR AT BACK END
Where do costs come from?
• 36% for back, spine & other strains
• 26% for slip and falls
• 14% struck by objects
• 5% for machinery accidents
• 5% for vehicular accidents
• 85% could have been avoided with safer practices
HOW DID WE GET HERE?
Attorneys
• More involved now than ever
• Make the case 15 times more expensive
• Contingency fees responsible for 50% of all costs
• Prolonged disability leads to greater hourly return
• Options include caps and ADR mechanisms
RESTORATION OF FEE CAPS• Florida’s system became highly fee driven• Legislature amended statute in 2003
– Provided sliding contingency fee scale– Struck down as ambiguous in Murray case
• In 2009, HB 930 restored attorney fee caps• Amended §440.34(3) to remove ambiguity• Claimant no longer entitled to “reasonable fee based on
hourly rate• Has dramatically reduced state insurance rates• No longer among top 10 in country• Constitutional challenges remain a possibility
HOW DID WE GET HERE?
Doctors
• More "specialists" backing fraudulent claims
• Medical expenses amount to 40% of benefit costs
• Doctor shopping is common
• Encouraged to overtreat patients
• Need more objective definitions for impairment
GOVERNMENT RESPONSE
State Legislation
• Statutory reform
• Settlement mechanisms
• Anti-fraud legislation
• Special investigative units
• Drug-free workplace program
• Anti-Retaliation Statute
GOVERNMENT RESPONSE
Federal Legislation• ADA
– Focus on ability• FMLA
– Focus on minimum leave• OSHA
– Focus on workplace safety• COBRA
– Benefits continuation• HIPAA
– Privacy amendments
EXTERNAL RESPONSE INSUFFICIENT
Employers Are Getting Hit on All Sides• Lack of support from carriers• Lack of concern for long-term interests• Employers increasingly isolated• Need for comprehensive internal program• Bring costs down to manageable levels• Most effective response is a proactive one
SO WHAT CAN YOU DO?• Experience has taught us that it takes commitment
from the top down.• You must commit to a written plan that is tailored to the
needs of your organization.• Cost-containment is a cultural mindset.• This culture must be embraced from the highest levels
within the organization.• It must also pushed down to the lowest levels of
supervision and beyond.• Someone must be accountable for execution.
ESTABLISH A COST-REDUCTIONPROGRAM• Put it in writing• Make someone responsible• Give them time, resources and authority• Implement across company lines• Make cost reduction a top priority• Allocate cost between departments
EVALUATE YOUR CLAIMS HISTORY• Get an overview• Ask why costs are so high• Evaluate claims over 5-year period• Avoid generalizations• Compile objective and accurate information• Look for general patterns• Review files for suspect claims• Review OSHA 200 and 300 logs
GET ACQUAINTED WITH STATEPROCEDURES• Knowledge is essential• State laws may vary• Don't leave it up to your lawyer or carrier• Get personally involved• Provide input on settlement vs. litigation• Don't wait until the claim is filed• Attend educational updates
MONITOR COMPLIANCE WITHAPPLICABLE LAW• Audit your plan for compliance• Select employees carefully, but legally• Train supervisors on ADA, FMLA
and other laws• Observe State drug testing and
retaliation laws• Observe bargaining obligations
NETWORK WITH AREA EMPLOYERS
• Seek out employers in your area/industry• Develop sources of information• Explore risk sharing possibilities• Participate in local, State and national
business associations/chambers
PARTNER WITH YOUR INSURANCEBROKER• Require periodic file reviews• Work towards resolution• Attend mediations and hearings• Treat all claims as a significant concern• Demand timely disposition• Question reserve amounts and practices• Consider unbundled services• Obtain access to on-line claims systems• Access adjuster notes and follow progress• Weigh in on case strategy
KNOW YOUR INSURANCE POLICYINSIDE-OUT• Don’t just accept the policy in front of you• Read it with a critical eye• Follow the money• Correlation between current experience and future
premiums• Who pays for safeguards?• Who picks the attorneys?• How does adjuster get paid?
LOOK OUT FOR CONFLICTINGINTERESTS• Develop working knowledge of your policy• Claim handlers may have different interests• Discuss any concerns with adjusters and attorneys• Inviting competitive bids every 3-5 years• Ensure the most competitive pricing.• As organization's representative, always look out for
its best interests...alone
CONSIDER SELF-FUNDING• Employers are returning to this• Willing to live with more risk for
reduced cost• Self-funding -- pay benefits directly• Self-insurance pools• Individual self-insureds• Must have net worth of $250,000• Wrap-up policies• Retrospective rating plans
MAKE SAFETY A CONDITION OFEMPLOYMENT• Enforce a “zero-tolerance” safety policy• Drive the right incentives• Use the “carrot and the stick”• Change the mindset• Apply safety rules uniformly and consistently
DEVELOP EFFECTIVE SAFETY PROGRAMS• Safety and health management programs• Periodic self-audits• Safety committees• Accident/Incident investigation• Training• Disciplinary procedures
USE MEANINGFUL REPORTING FORMS• Avoid canned forms• Devise personalized documents• Use them consistently• Pin down the employee's story• Attach witness statements• Obtain signature of management
CHOOSE MEDICAL PROFESSIONALS CAREFULLY• Choosing from a panel or going outside• Choose primary care providers carefully• Develop trusting relationship• Give doctor a workplace tour• Battle of doctors• Get the best one you can• Controlling primary care = controlling cost• Set up claim management protocols• Develop relationship over time
RETAIN AGGRESSIVE ATTORNEYS AND ADJUSTERS• Retain the right to choose• Negotiate into policy• Insist on prompt communication• Shop around• Look for creative ideas/strategies• Insist on individualized attention• One who puts your interests first• Avoid contingency fees on gross billing• Make sure they actually process the bill
TAKE ACTION ON EACH FILE SEPARATELY• Every file is different• Review every file on its own• Don't assume it is getting individual attention• Select a separate course of action• Negotiate for unilateral authority• Move quickly and be proactive• Look for indications of fraud• Use counsel to obtain privilege• Be a “squeaky wheel”• Recognize OSHA, multi-employer and civil litigation
exposure
VIGOROUSLY CONTEST FRAUDULENT CLAIMS• Avoid a "soft touch" reputation• Fraudulent claimants file other claims• Warn employees of the consequences• Go on the offensive• Look for delayed notice• Get a full release of all claims• Get personally involved• Report suspected fraud
– 1-800-378-0445• Be prepared to try the case
HIRE DEFENSIVELY• Use a comprehensive application• Conduct thorough reference checks• Consider credit checks• Interview effectively• Terminate for falsifying information• Focus on pattern absenteeism• Avoid prohibited inquiries• Use introductory period aggressively
ADMINISTER AGILITY TESTS• Job-related and consistent with business
necessity• Can applicant perform essential functions?• Have them show you how they would
do task• Administer to employees in same
classification
ADMINISTER A SUBSTANCE ABUSE POLICY• Legal program to remove current users• Correlation between drug use and
increased cost• Statistically lose more time due to accidents• Florida actually provides incentives for those
who test• Carriers often do as well
DRUG FREE WORKPLACE PROGRAM• Compliant programs qualify for 5% discount
on compensation premium rate• Requirements set forth under §441.102• Must test except on a random basis• May provide for immediate discharge• May also require completion of evaluation,
counseling and rehabilitation assistance• Beware of second chances for safety-
sensitive or customer contact positions• Lab must be approved by State Agency for
Health Care Administration
MAKE LEGAL POST-OFFER INQUIRIES• Take advantage of window of opportunity• Consider mandatory post-offer exam• Condition offer on exam results• Inquire into pre-existing conditions that may
qualify for subsequent injury trust funds• Reduce chance of injury/increase
effectiveness
ASSIGN WORKERS TO JOBS THEY CAN PERFORM• Determine essential functions of each job• Identify job-related qualification standards• Ascertain physical requirements• Consider specific, updated job descriptions• No need to create new position• Consider reassignment to vacant position• Stress safety at orientation
APPLY A UNIFORM MEDICAL LEAVE POLICY• Consider medical authorization prior
to return• Put it in writing, disseminate and train
managers• FMLA need not interfere• Run FMLA leave concurrently• Consider termination on leave expiration• ADA accommodation issues• Give COBRA notice
PERIODICALLY EXAMINE CURRENT EMPLOYEES• Job-related and consistent with business necessity• Fitness for duty exams• Determine whether employees remain able to
perform essential job functions• Mandated DOT, OSHA and other testing
CONSIDER MANAGED CARE ARRANGEMENTS• Must be approved by Agency for Health Care
Administration• Coordinates medical care to reduce
unnecessary treatment or cost• Programs must include written statement of
objectives and procedures for dealing with sub-standard medical services
• May request utilization review by Division of Workers’ Compensation at (850) 413-3100
ENCOURAGE OPTIONAL TESTING PROGRAMS• Adopt a voluntary health program• Provide opportunities and reminders• Consider wellness programs, blood
pressure screening, cancer detection, etc.
PROMPTLY RETURN EMPLOYEES TO WORK• Bone of contention• Light duty implications of FMLA/ADA• Consider temporary light duty• Explain terms at outset• Designate a coordinator to assist in return• Show genuine concern• Reassure employee• Keep them involved• Eliminate incentives not to work
CREATE TRANSITIONAL DUTY PROGRAMS• Establish firm time-tables• 90-day programs are the norm• Provide additional 90 days at mgmt. discretion• Enforce the time frame uniformly• Don't create long-term under-classes
TRAIN MANAGERS TO BECOST-CUTTERS• Front-line supervisors have greatest impact• First line of defense• Educate them on true cost of insurance• Respond immediately/report accidents• Refer to appropriate physician• Train on accident investigations• Know safety procedures• Accident diagnosis and prevention• Show personal concern for employee• Recognize fraudulent claims• Reinforce good behavior
TRAIN EMPLOYEES TO WORK SAFELY
• Implement a comprehensive safety program• Consider a safety committee• Continuously publish/update safety rules• Require prompt injury reporting• Enforce all safety rules• Respond with appropriate discipline• Consider safety bonuses, gain sharing and other
incentives
MANAGE INJURIES BEFORE THEY MANAGE YOU• Follow up with worker by telephone• Adopt a pro-active approach• Involve supervisor in return process• Emphasize prompt treatment and
early return• Consider a "transitional work center"• Re-design jobs to improve ergonomics• Computerize claims data
WHAT STRATEGIES WORK BEST FOR YOU?
Fisher & PhillipsLLPATTORNEYS AT LAW
Solutions at Work®
Final Questions
Steven M. Bernstein
Fisher & Phillips LLP2300 SunTrust Financial Centre
401 E. Jackson StreetTampa, Florida 33602
(813) 769-7500Atlanta · Charlotte · Chicago · Cleveland · Columbia · Dallas · Denver · Fort Lauderdale · Houston · Irvine · Kansas City · Las
Vegas · Los AngelesLouisville · New England · New Jersey · New Orleans · Orlando · Philadelphia · Phoenix · Portland · San Diego · San Francisco ·
Tampa · Washington, DC