Archive for January, 2004

Study shows active recovery fosters return to work

Thursday, January 29th, 2004

A recent study on lower back pain and return to work was conducted by a Dutch research team, and the findings were unsurprising to those of us who espouse the idea of an active rather than a passive recovery whenever possible. In the study, workers with nonspecific low back pain who engaged in a graded activity program returned to regular activities – including work – sooner than those who got “normal care.” On average, the active recovery path cut one month off a three-month recovery period, and follow-up studies showed no difference in the reinjury rate.

This study bolsters the case for employers to have a safe, progressive return to work program that eases injured workers back to their normal jobs. The study author comments:

“Athletes and other professionals are highly motivated, have high self-esteem, are not depressed, and have a strong motivation to keep doing what they always do,” he suggests. “Can we imbue the injured worker with some of the ideals and motivation of the injured athlete?” Based on the van Mechelen team’s study, the answer appears to be “yes.” Their program changes how disabled workers see — and cope with — their lower back pain.”

Dr. Jennifer Christian is an occupational physician who has worked in settings ranging from an insurer’s office to right on the shop floor. She often uses “the grocery store test” as a barometer of fitness for work. It goes something like this: If you worked in your family grocery store, would you be back at work, or would the injury or illness preclude that? Of course, it goes without saying that any worker’s return to work after an injury of illness must be planned carefully within physician restrictions.

The hidden key in both this study and the grocery store test may well center on that all-important word, motivation. If you are an employer, ask yourself this: would your employees be motivated to come back to your workplace?

By the way, if you ever have the chance to hear Dr. Christian speak at a national meeting or forum, do be sure to sign up…she is quite a forward thinker on workers compensation and disabilty issues.
And thanks to Judge Robert Vonada and his always excellent PAWC weblog for pointing us to this study.

Worker outcomes: are some workers being marginalized?

Wednesday, January 28th, 2004

Peter Rousmaniere has a column entitled A Voice of the Worker in Risk & Insurance that is well worth reading. He reports on the Workers Compensation Research Institute’s (WCRI) study, Outcomes for Injured Workers. The research encompassed 3,000 claimants in California, Massachusetts, Pennsylvania, and Texas. It’s one of the first studies from the worker perspective, assessing recovery, return to work, and access to and satisfaction with health care.

There is much in the study that provides a springboard for further study – why are workers more satisfied and why are outcomes better in MA and PA than in CA and TX? Satisfaction and recovery, it appears, do not align with the highest expenditures, for example.

Rousmaniere discusses one disturbing aspect of the study that points to a worker population that is being marginalized:

“Many injured workers never succeed in returning to the wage levels they had achieved before their accidents. The data suggest that the vast majority with less than an eighth grade education do not get close to where they were pre-injury. They account for much of the injured workforce in states like California and Texas, maybe due to the large Hispanic workforces there.”

He suggests that, given these circumstances, the most attractive option for these workers might be joining the cash sub-economy or to seeking some form of permanent disability awards.
Rousmaniere suggests that

” … the workers’ comp system can respond only so much on behalf of this worker group. The California system’s tableau of generous legal and medical benefits for claimants is a mirage. The concept of voc rehab has largely failed as a major solution. What may help are better incentives for the employer to retain the worker from day one of the injury and through, if and when a permanent award is made.”

We must ask ourselves if, in these instances, we are fostering a permanently disabled class. Clearly, the most successful outcomes occur when incentives are aligned – worker and employer. Both must have an investment in and commitment to the benefits of recovery and return to work.

Economic downturn effects changes in health insurance coverage

Wednesday, January 28th, 2004

Thanks to Pulse for pointing us to the study Changes In Health Insurance Coverage During The Economic Downturn: 2000 – 2002. The study reports that the uninsured population has grown by 3.8 million during that time period. Low-income Americans, particularly males and nonparents, fared the worst, as gains in public programs failed to offset lost employer-sponsored coverage. Look to the possibility of more uninsured workers trying to secure coverage where they can – this includes potential cost shifting to the workers’ comp system.

Exclusive remedy, “bad faith” claims, and the $12 million lawsuit

Friday, January 23rd, 2004

Exclusive remedy generally protects an employer from a lawsuit. If an employee suffers a work related injury, the employer provides a state-regulated schedule of benefits to cover medical care and lost wages during recovery. In exchange for these benefits, the employee forfeits the right to sue. Workers compensation becomes the sole or exclusive legal remedy. Often, this protection is extended to insurers who are acting as agents for the employer.

However, there are exceptions. One exception is bad faith on the part of the insurer. A successful bad faith suit might be triggered by an insurer’s nonpayment of claims, mass denial of claims, or the like.
This week, a woman in South Dakota just secured a $12 million award for a bad faith claims practice, most of it in punitive damages. The claim involved the denial of about $8,000 in medical bills for a carpal tunnel injury. The original grounds for denial centered around compensability and whether the injury arose out of and in the course of employment.

Her insurer said the denial occurred because “there was a lack of proof that her hand problems were caused by her work” and further suggested that “her hand problems were likely the result of a 1998 home injury, not her work in the kitchen of the nursing home.”

A determination of work-relatedness and compensability are huge issues in many repetitive stress injuries, and if this claim dispute had ended there, the claim might have stayed within the realm of the state workers comp authority to uphold or deny. But in this case, the insurer’s claims handling practice was the smoking gun that gave rise to a charge of bad faith, opening the door to a suit.

” … the case centered around a Travelers Insurance incentive program that offered bonuses to claims workers who lowered payouts on claims. Called the Claim Professional Incentive Program, it offered workers end-of-year bonuses of as much as 20 percent of their pay if they reduced overall payouts from one year to the next.
Abourezk argued that the program created an improper conflict of interest for claims adjusters, who are supposed to be motivated by fairness to claimants, not cost control for insurance companies.”

The judgement will be reviewed by a higher court so the punitive award may or may not stand, but it serves as a cautionary tale to insurers — who are, after all, essentially finance companies — that managing a workers compensation claim is not simply the exercise of processing paper in the most cost efficient way possible, but the response to a human event. In our experience, keeping the focus on the person rather than the dollars generally results in the most favorable outcome by whatever measures you use for success.

Fashionable vs. unfashionable workplace violence?

Friday, January 23rd, 2004

Workplace violence is the second leading cause of worker deaths – and the top cause among women. Is there “fashionable” and “unfashionable” workplace violence? Jordan Barab makes some strong points on this topic and the idea of profiling as a preventative measure:

“Instead of generating profit-making consultants, unfashionable workplace violence focused on boring issues like staffing levels in institutions, lockdrop safes and windows in retail establishments that left a clear view to the street, and locked doors and security guards for social service agencies. Instead of making money, these preventive measures cost money.

The problem with the fashionable workplace violence, is that it was largely a myth. So-called “worker-on-worker” or “internecine” violence never amounted more than about 7% of all workplace violence, even though it received close to 97% of the press.”

more on workplace violence at Confined Space

When Disaster Strikes…

Tuesday, January 20th, 2004

When disaster happens, every decision made by management is scrutinized. After a recent oil tanker crash which killed four people on Interstate 895 in Maryland, investigators opened the books on the company’s safety record (below average) along with a careful review of the employee’s driving and health history (inconclusive). While the primary goal of the investigation is to determine the cause, investigators are always looking for a “smoking gun” — the crucial information management should have known but did not; the key steps management or the employee should have taken, but did not. It boils down to “what should you know? What did you know? And what did you do about it?” First, investigators try to determine responsibility (the cause of the accident). Then comes the blame. After a disaster like this one, more than a company’s reputation is on the line. The company’s future is at risk.
In this particular tragedy, we may never know what caused an experienced driver to lose control of his rig, plunge off a ramp and incinerate three other vehicles and their drivers. But the lessons for managers are clear: establish unambiguous standards for your employees. Document your safety and enforcement efforts. And take prompt action when standards are not met.

By the way, it appears that all the victims in this tragic accident were working. Which in turn means that all the fatalities are probably work related. Regardless of what the investigators find, there will be workers compensation benefits paid to the surviving families. In the short run, the individual employers of these victims will see their workers compensation premiums rise as the costs of these claims are factored into the experience rating. If the company owning the tanker is found in any way to be responsible for the accident, there may well be subrogation which shifts the costs away from the workers compensation policies onto the liability coverage of the tanker company. It’s a tangled web indeed. Disasters usually play out in just a few horrifying moments, but the consequences are felt for years to come.

Walmart locks night shift workers in

Sunday, January 18th, 2004

The New York Times today features a shocking story on night shift employees who are locked in at Walmart and its affiliated stores. (free registration required) In a work practice that seems like something out of a Dickens novel or a third world sweatshop, exits are locked at night under the guise of protecting workers. The article relates the story of one employee, Michael Rodriguez of Corpus Christi, TX, who waited hours to get help for a crushed ankle because all exits but the fire exit were locked, and there was no manager with a key. He had been led to believe that he and his supervisor would both be fired if he used the fire exit.

“The reason for Mr. Rodriguez’s delayed trip to the hospital was a little-known Wal-Mart policy: the lock-in. For more than 15 years, Wal-Mart Stores Inc., the world’s largest retailer, has locked in overnight employees at some of its Wal-Mart and Sam’s Club stores. It is a policy that many employees say has created disconcerting situations, such as when a worker in Indiana suffered a heart attack, when hurricanes hit in Florida and when workers’ wives have gone into labor.”

Company spokespeople maintain the practice is to protect workers who work in high crime areas, but employees and other industry insiders say the practice is primarily to curtail “shrinkage” or theft.
It’s boggling to know that such draconian work environments still exist in this country. A little over 12 years ago, 25 workers lost their lives while trying to kick down doors in a fiery inferno in a chicken processing plant in North Carolina. Yet the practice still persists, although one might think these would be isolated incidents rather than accepted policy in the world’s most prominent retailer.
There is no more fundamental mandate than worker safety. Not only is protecting workers the right thing to do, it’s usually the cheapest thing to do in terms of risk management.

Check out our new business weblog discoveries

Sunday, January 18th, 2004

We’ve added a few new corporate weblogs to our resources sidebar:, featuring claims adjusting news.

BusinessPundit, a weblog focusing on corporate strategy, economics, neuroscience, and more

The Cost of Lag Time

Thursday, January 15th, 2004

One of workers’ compensation’s overarching principles was driven home to me today when a colleague asked me a question. He had attended a marketing meeting at a New England insurance carrier’s headquarters. During the meeting, a carrier representative passed out a one-page memo addressing the benefits of timely reporting of injuries. The carrier’s memo asserted that prompt reporting, on its own, could lower the cost of claims by as much as 47%.

My colleague asked the carrier representatives where this assertion came from. Strangely, they had no idea. It seemed to be like a tribal myth, just passed around from person to person with no attribution. So, he asked me.

I really have no idea where this particular carrier got its data, but I do know that in the summer of 2000, Glen-Roberts Pitruzzello, ACAS, an actuary and pricing analyst with The Hartford Financial Services Group, wrote the definitive study on prompt reporting for the National Council on Compensation Insurance’s (NCCI) Summer Issues Report.

His findings, which involved analyses of 53,000 claims, are more than compelling. Here are some of them:

1. Injuries reported within 2 weeks are 18% more expensive than those reported within 1 week. And it gets progressively worse as time goes by. For example, injuries reported between the 4th and 5th week following an injury are 45% more expensive.

2. The biggest finding involves back injuries, which, as a group, are 35% more expensive if not reported within the first week.

3. Soft tissue strains and sprains are 13% more expensive if not reported within one week; carpal tunnel injuries, in which onset is admittedly difficult to pinpoint, are 11% more expensive with late reporting.

4. Litigation is another area impacted by late reporting. Twenty-two percent of injuries reported within 10 days are litigated; 47%, when the reports arrive more than 31 days following the injury.

Although prompt reporting is only one of a number of management best practices to lowering workers’ compensation costs, it’s an important one. It’s one of those overarching principles. Moreover, we’ve found that well-managed companies are more likely to report injuries promptly than less well-managed organizations.

Nonetheless, one has to ask, “If prompt reporting saves so much money, why don’t more employers do it?” Well, 20 years experience with more than 4,000 companies suggests the following answer to me: They don’t know any better. They’ve never been taught. That’s shameful.

Good business reads from the blog world

Tuesday, January 13th, 2004

One of the best things about weblogs is the news filtering function they fill – they find good things for you. Here are a few items we might have missed but for our fellow bloggers.
40 government sites you can’t live without via The Small Business Blog
“Whether it’s a loan, a contract or regulatory information you seek, these sites are just what you need to get acquainted with what the government can do to help you start or grow your business.”
Why can’t we get anything done? via Circadian Shift
“Stanford B-school professor Jeffrey Pfeffer has a question: If we’re so smart, why can’t we get anything done? Here are 16 rules to help you make things happen in your organization.”