Friday, February 7, 2014

Pay The Bill & Move On

I drew some fire for my post on January 7 about return to work, "The Misguided Conversation."

And I knew I would with my bottom line conclusion that workers' compensation has nothing to do with return to work (and stay at work - I am using the RTW term inclusive of both).

My conclusion is that there are only two basic purposes to present day workers' compensation: 1) provide medical treatment without hassle (or at least not too much hassle) and 2) provide some money to help make up for the work injury (whether you characterize that as for lost income or future earnings or pain and suffering or whatever - it's payment of money for an injury).

Return to work is only a tool, and a good tool if it can be implemented, because it greatly benefits both the employer (lowering the experience modification factor attributable to an open claim) and employee (returning some self-worth and repatriation into society).

But RTW requires both an accepting employer and a willing employee.

RTW is even tougher now post recession, a recent article published in the Wall Street Journal found, particularly for men aged 25 to 54 - prime working years for men, highlighting that there needs to be an accepting employer and willing employee - both of which may be impacted by external forces, such as the economy.

According the the WSJ story, one in six men in that age bracket don't have jobs.

This tallies up to 10.4 million men.

That's a lot of unemployed.

The reasons are multitudinous, but can be summarized down to 3 basic generalizations: 1) skills and education don't meet the current demands of the market; 2) governmental benefits are richer than the net monetary take from working; and/or 3) physical or mental issues inhibit employability.

The WSJ notes that economists are befuddled by the high rate of unemployability in this age group.

"Economists who had expected the fraction of men working or at least looking for work to be approaching prerecession levels by now are dumbfounded," the story says, quoting Johns Hopkins University's Robert Moffitt, who has researched the subject, stating, "It's unexpected."

The State of Washington reported that its "stay at work" program has paid $19.4 million to more than 2,300 employers who created modified positions for injured workers.

But is that money well spent? What is the actual return on investment for employers? For employees? For the state? And how much of the success of the program, if any, is attributable to the positive alignment of the necessary elements?

Washington's program pays up to half of a worker's base wages for up to 66 days, with the maximum reimbursement being $10,000. It also reimburses employers for training, equipment and clothing costs to keep the worker in a modified job while recovering from an injury.

What the state's Department of Labor and Industries doesn't say is how many of those workers who have gone through the program are still employed by their original, pre-injury employer - note the obligation of the stay at work program is for 66 days...

According to a L&I publication, in 2012 there were almost 85,000 workers' compensation claims that were accepted out of a total of over 101,000 filed. Of those accepted, there were 1,665 completed retraining plans, nearly the same amount as in 2011, the year the program started.

Let's assume that 2013 numbers are about the same, that there wasn't any significant jump or decline in the number of employees "saved" from unemployment by this stay at work program - that means the cost of the program was about $3,800 per worker since inception.

If those workers actually stay employed then that's a pretty good result and a good ROI.

But we don't know how many of those workers remain employed by the employers who participated in the program, since the program is good for only 66 days.

The unemployment rate in the state of Washington, according to the Bureau of Labor Statistics, was 6.6% as of December, 2013. By comparison, California's was 8.3%, Michigan was 8.4% and Nevada was 8.8%.

(Remember that the unemployment rate does not actually reflect people that are out of work. As explained in a 1/10/2014 "technical note" issued by the BLS, "The civilian labor force is the sum of employed and unemployed persons. Those persons not classified as employed or unemployed are not in the labor force. The unemployment rate is the number unemployed as a percent of the labor force.")

The California Workers' Compensation Institute said an analysis of claims from accident years 2005 to 2010 found an attorney was involved in 80.4% of permanent disability claims and 38.1% of all indemnity claims.

There are multitudinous reasons for attorney involvement, not the least of which is that the system is frustratingly complex in California.

One intangible element involved that was noted by CWCI communications director Bob Young is that disruption of work and damage to the relationship between the employee and employer are often caused by longer return-to-work times in litigated cases.

Looking only at the temporary disability claims from the sample, cases involving attorneys were associated with 74.5 days off work, compared to 25 in cases without attorneys. Permanent disability claims involving attorneys averaged 128.1 paid days off work, compared to 66.5 days off in cases not involving lawyers.

For all indemnity claims, time off work was four times higher when an attorney was involved, at 122.8 days, compared to 30.6 in cases with no attorney.

When we put all of this together I conclude: 

1) that RTW is helpful, but is not the goal of workers' compensation; 
2) that the goal of workers' compensation, provide quick and effective medical treatment along with some money without delay or argument, is more important to minimizing claim impact than RTW, or anything else for that matter; 
3) failure to provide quick, effective treatment or money without delay increases the risk of attorney involvement; 
4) if an attorney does get involved RTW is pointless and won't work; and 
5) there are still things you can't control, such as the economy or whether you have an accommodating employer or willing employee, and the best course of action for both employee and employer is to get the claim closed as quickly as possible given the law, regulations and reserve status, even if that means paying a premium that you think is too high.

There's no magic to workers' compensation claims management. Skill on the other hand in navigating a complex system involving deeply rooted emotions is imperative. Forget all the fancy-dancy acronyms and tricky techniques. Pay the bill and move on. THAT's how you control your claim costs.

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