Containing the Cost of Workers’ Compensation Steven M. Bernstein

1. Containing the Cost of Workers’ Compensation Presented by:Steven M. Bernstein, Esq. (813) 769-7513 Fisher & PhillipsLLP ATTORNEYS AT LAW Solutions at Work® www.laborlawyers.com 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

2. 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

3. 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

5. Costs doubling every four years

6. Premiums rising 10% every year

7. 40% of payroll costs in construction

9. 26% for slip and falls

10. 14% struck by objects

11. 5% for machinery accidents

12. 5% for vehicular accidents

15. Struck down as ambiguous in Murray caseIn 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

16. 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

17. GOVERNMENT RESPONSE State Legislation Statutory reform Settlement mechanisms Anti-fraud legislation Special investigative units Drug-free workplace program Anti-Retaliation Statute

19. 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.

20. 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

21. 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

22. 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

23. MONITOR COMPLIANCE WITHAPPLICABLE LAW Audit your plan for compliance Select employees carefully, but legally Train supervisors on ADA, FMLAand other laws Observe State drug testing and retaliation laws Observe bargaining obligations

24. 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

25. 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

26. 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?

27. 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

29. 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

30. DEVELOP EFFECTIVE SAFETY PROGRAMS Safety and health management programs Periodic self-audits Safety committees Accident/Incident investigation Training Disciplinary procedures

31. 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

32. 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

33. 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

34. 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

36. 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

37. 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

39. 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

40. 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

41. 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

42. 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

43. 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

44. ENCOURAGE OPTIONAL TESTING PROGRAMS Adopt a voluntary health program Provide opportunities and reminders Consider wellness programs, blood pressure screening, cancer detection, etc.

45. 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

46. 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

47. 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

48. 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

49. 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

50. WHAT STRATEGIES WORK BEST FOR YOU?

51. Fisher & PhillipsLLP ATTORNEYS AT LAW Solutions at Work® Final Questions Steven M. Bernstein Fisher & Phillips LLP 2300 SunTrust Financial Centre 401 E. Jackson Street Tampa, Florida 33602 smb@laborlawyers.com (813) 769-7500 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