Tide TRACKER

Breaking News: Midyear Filing Is Unlikely to Change

by Ed Taylor
The WCIRB has stated that they are unlikely to file for a mid-year increase in advisory pure premium rates, according to a recent article on WorkComp Central. Unfortunately, this will not do much to help employers. Over the course of the last two years, it has become apparent that insurance carriers have been steadily increasing their pure premium rates in filings to the insurance department. And there doesn't appear to be any relief on the horizon. To give you an idea of how quickly rates are increasing, take this example: a rate of $2.56 was adopted by the Insurance Commissioner last November. Since that time, the rate has risen by about 1.7%. The rating bureau has projected about 3% growth in indemnity severity and 5% growth in medical severity. This results in an overall loss ratio of 79.9% on policies, excepting those between July 1, 2013 and December 31, 2013. It also appears that the projected expense ratio is higher which results in an allocated loss adjustment expense ratio of 24.3% with a medical cost containment programs accounting for 7.5% of that increase. It is highly doubtful that we have seen the true effects of SB 863 at this point. The average industry-filed rate as of January 1, 2013 was $2.55 per hundred dollars of payroll . That's 7.1% higher than the average of $2.38 from July 1, 2012. The governing committee met the first week of April. It is not anticipated that they will have a midyear filing. However, there are changes that will

Helping to Navigate the Troubled Waters of Workers Compensation

Table of Contents
Is OSHA Wrong About Safety Incentive Programs? ..pg. 2 Fraud Occurs On Many Levels .pg. 3 Crossing the Divide: a Look Inside Fraud.pg.4 Stipulation Vs. Compromise and Release: Know Your Settlement .pg. 5 For You Information: What Is Permanent Disability ..pg. 6 The World of Data Integrity: Useless Information to Some; a Wealth of Knowledge to Others .....pg. 7

benefit employer, such as how the X-Mod is being calculated. New limits will be set as to how much an employer's X-Mod could change as a result of a single accident. These changes will be presented in June 2013. RiskSolutions is dedicated to keeping you abreast of changes that will affect your bottom line. Look for further news on the X-Mod changes in our next newsletter.
Ed Taylor, CEO and one of the founders of RiskSolutions Inc. has more than 35 years of experience in the risk management field. He brings a passion for safety and employer service to RiskSolutions. His goal is to provide a safe workplace for workers and to educate employers and brokers. The company name expresses Eds commitment to the industry of which he is a part. As the captain, Ed directs an outstanding crew who will gladly plot the safest course through the treacherous waters of the Workers Compensation system.

Is OSHA Wrong About Safety Incentive Programs?

by Joe Stevens
Recently, OSHA issued a bulletin discouraging employers from using safety incentive programs, based on the premise that injuries could go unreported due to peer pressure from workers who want to win awards. Sounds reasonable, but I wonder if OSHA isnt missing the big picture.

workers individual safety is to the company. Everything an organization does to increase the awareness and importance of safety pays off, both for the individual workers as well as the company. When an organization shows that they care about safety- that it is their highest priority- workers take it more seriously.

Our recommendation for a safety incentive program is to make it dynamic-not static. No bingo or scratch cards and no monthly reward added to the paycheck. No entitlements, in other words. Safety awards meetings that are attended by managers who congratulate and thank winning teams and individuals for being safe, that provide recognition and show appreciation, are wonderfully effective. Acknowledgement of a job well Lets start by examining the downside of incentives, as done goes a long way to providing encouragement and laid out in the OSHA argument. motivation to keep up the good work. Incentives and rewards are an important piece of these programs, but OSHA presumes that workers are easily dissuaded from when recognition is given, they are not the focal point. reporting legitimate injuries. OSHA should Dynamic meetings send a clear message on how acknowledge that hidden injuries are almost always of the minor variety, since getting treatment for a major injury outweighs any other considerations. A seriously injured workers primary concern is always getting treatment. The second OSHA argument is that rewarding departments who perform safely is discriminatory against those departments with injuries. Really? Since when is it discriminatory to reward good performance? Should all salesmen earn the same commission so as not to discriminate against those who sell less? Should successful managers be denied raises because that discriminates against managers who do not perform well? There is a significant difference between rewarding excellence, and discrimination against everyone who did not perform to that level. There is a word for this kind of approach, but well leave that for another discussion. Lets compare OSHAs attempts to discourage the use of incentive programs with the potential benefits. The purpose of a good plan is to raise awareness of safe behavior, provide encouragement and motivation to perform jobs safely, and convey how important the

important safety is. Simply telling workers to be safe, no matter how sincere, is not enough. Every employer says that. On the other hand, demonstrating how important it is takes safety to a higher priority level and that is the basis for greater awareness. My biggest objection to OSHAs recommendation is this: OSHA completely ignores the benefits of injuries that dont occur! An effective incentive program that increases awareness and raises the priority level of safety always leads to fewer injuries, yet OSHA overlooks this benefit. If their premise was true, and a minor injury did go unreported, how does that compare to ten other injuries that never happened due to greater awareness? The goal of any organization should be to strengthen the safety culture and raising the priority level of safety, through the use of dynamic safety recognition and rewards program, is one of the most effective ways of accomplishing that. Joe Stevens founded Bridge Safety Consultants in 2003 to provide companies and organizations with a resource to help them strengthen their safety culture. The company conducts a safety culture audit, then designs and manages safety recognition and rewards program, with bilingual monthly safety meetings. Mr. Stevens can be contacted at: [email protected]. To see a typical meeting in action, visit their website: www.bridgesafetyconsultants.com.

Throughout my many years in Workers' Compensation, there has been a great deal of discussion about employee-level fraud. Unfortunately, that is only the tip of the iceberg. The modern world of Workers' Comp is filled with threats. We are seeing the emergence of practices like 'capping' in which employees are approached at the unemployment office and encouraged to file Workers' Compensation claims against their previous employers. Time and again, we see medical providers prescribing excessive and unwarranted treatment, medications, and time off to Workers' Comp patients. This results in millions of dollars in unnecessary costs to employers in the state of California. In the case of Pacific Hospital, it was reported that the facility billed $533 million for spinal fusions performed between 2001 and 2010. What we don't know, and what the federal officials won't say, is what percentage of those charges are suspected to be fraudulent. If one medical provider could cause such an uproar over their billing practices, imagine what could be happening across the whole of the state. We all know the usual suspects that account for large medical costs in our claims on a daily basis. But we must be wary of the more subtle offenders. Our bill review practices must be updated and the software must be designed to identify fraudulent billing practices. We cannot simply be "business as usual." That bit extra could ultimately save so much. RiskSolutions was founded to provide brokers and employers with the ability to assist their insurance carriers and TPAs in monitoring fraudulent activities, regardless of the parties involved. We will continue that pursuit, always seeking ways to improve and refine, on behalf of the employers of California .
Linda Taylor, CSIA, WCCP, RN, CE, COO and co-owner of RiskSolutions, has more than 30 years in the Workers Compensation and risk management fields. She combines claim knowledge with medical knowledge to complete the picture for total claims management. Her goal is to provide the best outcome possible for the employer, injured worker and other stakeholders that struggle with a very complex system. Her experience, vision and insight drives a holistic approach to claims management that empowers employers to create their own safe harbor during these stormy times in Workers Compensation.

Fraud Occurs On Many Levels

by Linda Taylor
There was big news recently in Work Comp Central. It was reported that federal officials served search warrants to Pacific Hospital of Long Beach and Industrial Pharmacy Management in Newport Beach California as part of an ongoing fraud investigation. If trends continue the way they have, this could be happening more and more.

Crossing the Divide: a Look Inside Fraud

by James Carey

obtaining benefits that arent due (e.g. obtaining state disability benefits while receiving temporary disability payments). Next is the lie. What did the offending party say or do to obtain this material benefit? Did the claimant apply for state disability benefits and sign a document stating he or she did not have a pending claim? Or perhaps say that they were incapable of working to a doctor and were later found to be working? As with the preceding conditions, one or two of these criteria is insufficient. The key is getting all four and being able to tell a story to the jury.

Where does your mind go when you hear the word fraud? Do you immediately think about a guy, out working some other job after supposedly being unable to work? Or how about someone faking a slip and fall at the grocery Finally, addressing knowledge of the lie. Did the store? These are clear offending party know that the lie would secure benefits? examples of fraud, but more often than naught, the Much like the Miranda warnings we see on TV, this cases we think are fraud are in fact an abuse of the goes directly to Fifth Amendment rights and in order to system that does not amount to criminal activity. make a fraud case stick is to ensure knowledge of the crime. Most insurance companies send out letters or Why make such a distinction? Fraud is an intentional advisements on the checks stating that cashing the act aimed at gaining benefits that would not otherwise check while employed or receiving benefits from be due or, conversely, mis-classifying employees to another source is fraud secures the knowledge aspect. obtain a lower premium rate. It is incredibly difficult to prove and it has four specific criteria that must be met In order to cook up a good fraud case, all ingredients before it can even be considered a criminal case. The must be present. Without all of them, there is only best way to remember these criteria is with the acronym abuse and just a hope that someday it might turn into a MILK Materiality, Intent, Lie & Knowledge. Simply full blown fraud case. But dont give up hope. because an injured worker has hired an attorney or is Persistence and provision of additional evidence are still off work when a seemingly reasonable recovery absolute necessities. time has elapsed, it is not sufficient cause to file a fraud case. James Carey, CSIA, WCCP is a graduate of the University First off, materiality is easy to prove because it speaks to what benefit(s) were gained as a result of the fraud. This could be medical treatment, indemnity benefits, a reduction in premium or artificially lowering the experience modification by failing to report claims. No one is immune from prosecution and my experience has been that it is a lot easier to prove a premium fraud case than it is to prove a benefits fraud case. As for intent, this is tougher to prove because there has to be some sort of motivation behind the act and there must be a goal. When documenting a fraud referral, this would be something as simple as a claimant wanting extra time off work, avoiding paying excess premium or
of California, Irvine and a veteran claims adjuster with more than a decade of experience. He has handled claims at insurance companies, third party administrators and government entities with strong experience handling highly complicated cases across multiple states and jurisdictions. He brings an aggressive, employer-oriented style to the table along with practical knowledge to help employers navigate the treacherous waters of the Workers Compensation system.

Stipulation Vs. Compromise and Release : Know Your

Settlements
by Lisa Sanchez
Most everyone- employers, defense teams, even the injured worker- wants to see a claim settled as quickly and painlessly as possible. To do this, it is essential that the make the "right" settlement. There are several factors that need to be considered when deciding which type of settlement would be in the best interest of all parties. The two types of settlements are the Stipulation with Request for Award settlement and the Compromise and Release settlement. In a Stipulation with Request for Award settlement, all parties agree to the terms of the settlement and the amount to be awarded as compensation. These settlements are ideal for individuals who remain employed by the company and whose insurance carrier has not changed. Most cases that settle by way of Stipulation with Request for Award include a Future Medical Care award and Permanent Disability benefits that are paid over a period of time. The claim will remain open for the injured worker to utilize his or her future medical care and to receive Permanent Disability benefits every two weeks. The Workers Compensation insurance carrier continues to hold responsibility for paying any type of medical care under the future medical care provision. A judge will need to review the settlement for adequacy and approve it. If one is in doubt about whether this is the type of settlement for them, it is best to consider the amount of exposure on the claim. If it is a life pension claim, then it is probably best to settle by way of a Stipulation. A Compromise and Release settlement, or C&R, is a type of settlement in which the injured worker receives a lump sum payment which buys out any benefits that continue to be owed to them such as Permanent

Disability benefits, future medical care and the Supplemental Job Displacement Voucher. The settlement value is based upon the level of permanent disability indicated in the medical reports, the value of the Supplemental Job Displacement Voucher and an estimated value of future medical care. Benefits are paid out in a lump sum rather than paid out over a period of weeks. This type of settlement resolves the remaining exposure on the claim. It is the most common with litigated claims. The employer and the insurance company are relieved from future liability with a Compromise and Release settlement. If a claim settles by way of Compromise and Release, the injured worker would then be responsible for paying their own future medical care treatment. A judge must approve in order for the settlement to be finalized. The claim can close when the final settlement amount is paid. As the injured worker's employment status is so integral to the settlement process, the employer should communicate to the insurance carrier any time there is a change in that status. For example, say an injured worker settled his claim by way of Stipulation with Request for Award and he later quits or is terminated by the employer. The Workers Compensation insurance carrier should attempt to settle the claim by way of a Compromise and Release to buy out the remaining exposure on the claim. Reaching the settlement process can feel like the home stretch toward resolving a claim. With the right kind settlement and a fair offer, all one needs if a reasonable claimant and a little luck to see even the most complicated claim safely home.

Lisa Sanchez, CSIA, WCCP is a graduate of the University of California, Riverside and has a Bachelors degree in Business Administration. She is a seasoned bilingual claims adjuster with more than eight years experience, having handled claims at a self-insured, self-administered employer before being drafted to the RiskSolutions team. She brings a unique, employer-driven perspective with her and hands on experience working one-on-one with management and injured workers alike helps employers to fathom the endless depths of Californias Workers Compensation system.

For Your Information: What is

Permanent Disability
by Melissa Rehm
The world of Workers' Compensation can be a tricky one to navigate. One of the things I'm most frequently asked about by employers is Permanent Disability. This benefit can have a dramatic affect on the life of a claim and an insured's X-Mod rating. The new year saw many changes to the Permanent Disability rating and payment process. Such an important factor in the Workers' Compensation process is due some clarification. Permanent Disability (PD) is evaluated only after the treating physician decides the injury or illness has stabilized and no change is expected. At that time, the condition has become Permanent and Stationary (P&S) and the claimant has reached Maximum Medical Improvement (MMI). If the injury or illness results in a permanent impairment, the claimant is entitled to PD benefits even if the claimant can work his or her usual and customary position. Once a claim is deemed P&S, the treating physician will identify the amount of Permanent Disability the claimant has in the final report. The physician will also determine whether any part of the disability was caused

by something other than the claimant's work duties, such as a previous injury or pre-existing condition. This is called apportionment. The physician will include in the final report an impairment number. The Permanent Disability Rating Schedule provides the formula to calculate the percentage of disability from that number. The claimant's occupation and age at the time of the injury are valued and used to calculate a final PD rating. Here we see our first major change. Effective January 1, 2013 the Diminished Future Earning Capacity (FEC) was removed from the rating process. After a rating has been determined, any apportionment that was found is subtracted from the final number. The disability will then be stated as a percentage. The percentage of disability corresponds to a specific dollar amount, depending on the date of the injury and the average weekly wages at the time of injury. A rating specialist from the Disability Evaluation Unit (DEU) may be consulted to help calculate the rating. Some significant changes have been made to the amount an employer pays in PD, provided they have 50 or more employees. For injuries before 2013, the amount will be affected by whether or not the employer makes a suitable return-to-work offer. If an offer is made for the claimant to return to regular or modified duty for a period of at least 12 months, whether or not the offer is accepted, the weekly rate will be reduced by 15%. If the employer is unable to return the employee to regular or modified duty, the PD rate is increased by 15% 60 days after the claim becomes P&S. As of January 1, 2013, however, all Permanent Disability ratings will be increased by a Whole Person Impairment factor of 1.4. For injuries prior to January 1, 2013, PD benefits must begin paying within 14 days of Temporary Total Disability benefits coming to an end. If no time was missed at work, PD payments are due from the date the treating physician deems the claim P&S. PD benefits continue to be paid every two weeks until a reasonable estimate of the disability amount has been paid. When the actual amount of PD due has been determined, any amount over the original estimate must be paid.

For injuries after January 1, 2013, PD payments are not due if the claimant returns to modified, alternative or regular work with the original employer at 85% of his or her original wages or return to work for any employer at 100% of wages. An adjusted payment begins with the last date Temporary Disability was paid or when P&S is declared- whichever is earlier. Permanent Disability can be a tricky path to travel. Its effects can be drastic and long-ranging. If carefully monitored and appropriately litigated, Permanent Disability does not need to disable an employer's finances. A good map and an eye on the road will ensure a successful journey.
Melissa Rehm, CSIA, WCCP is the manager and backbone of RiskSolutions Claims Oversight department. With a flair for customer service and experience in the forestry, hospitality, healthcare, manufacturing and automotive industries, she brings practical knowledge and uses it to develop innovative solutions for the clientele of RiskSolutions. With her experience and tenacity, she helps employers anchor their costs and keep their X-Mods afloat amidst the murky depths of the California Workers Compensation system.

unless you have one-eyed chimpanzees doing your data. But you do need a system of checks and balances. What does data integrity mean? According to the dictionary it means ensuring the accuracy and consistency of stored data, indicated by an absence of any alteration in data between two updates of a data record. Got that? I am sure you are as thrilled by that definition as I was reading it. But seriously, data integrity is integral to our day-to-day operations at RiskSolutions. It helps us maintain the consistency and accuracy of the information we receive so that the information we provide to our clients is current and relevant to managing your claims. At RiskSolutions, we have a department dedicated to data integrity. They input the information we receive from loss runs, adjuster updates and client communications, to establish a snapshot of every claim we are managing with our customized software suite, CompTracker. This department ensures that insurance carriers are identified correctly, loss data is appropriately maintained and reports are scheduled timely. We conduct routine audits and quality assurance checks to ensure the data we have can be leveraged in a meaningful way. Our clients see the results of data integrity when we are able to provide feedback and intelligence about insurance carriers and claims administrators, track trends in claims management and ultimately leverage this information innovatively to provide an edge for your business. Now about those TPS reports

The World of Data Integrity:

Useless Information to Some; a Wealth of Knowledge to Others
by Vanessa Mikulich
"Eight, Bob. So that means that when I make a mistake, I have eight different people coming by to tell me about it. That's my only real motivation is not to be hassled. That and the fear of losing my job. But you know, Bob, that will only make someone work just hard enough not to get fired. While this quote from the movie Office Space mocks the banality of office work and give us a good laugh, it also demonstrates how data integrity can be maintained and managed. Do we really need eight people checking on one set of information? Noreducing the costs of doing business P.O. Box 180 17602 17th St. Tustin, CA 92780

Vanessa Mikulich is a graduate of the University of California, Irvine and holds a degree in Psychology & Social Behavior. Vanessa comes from a background in the mental health field, most recently as a social worker with an emphasis in psychosocial intervention and motivational interviewing, working with dual-diagnosed patients. She is presently a board member with a local 501(c)(3) non-profit charity. As the data analyst for RiskSolutions, she has been instrumental in researching & developing new products, compiling statistical data and maintaining data integrity within RiskSolutions database environments.

(951) 943-6775 ext 151 Fax: (951) 943-5221 [email protected]