The Critical Role That Human Resources Plays In Managing Workers' Compensation Claims

Which Laws Apply To The Employer?

• Workers’ Compensation: All private employers - State law

• FMLA: Employers with 50 or more employees in a 75 mile radius - Federal law

• ADA: Employers with 15 or more employees - Federal law

• NOTE: State-specific laws

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Which Laws Apply To The Employee?

• WC: All employees, except independent

contractors and unpaid volunteers • FMLA: Any employee who has worked for an

employer for at least 12 months, or has worked at least 1,250 hours

• ADA: Any employee who is “qualified” and able, with or without accommodation, to perform essential functions of the job

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What Laws Apply to this Health Condition

• A single condition may fall under the protections of two or more statutes

• The nature of the employee’s health condition may change over time, e.g. begins as a workplace injury, becomes a “serious health condition” after three days of incapacity, and evolves into a disability limiting a major life activity

• Employers must continue to evaluate an employee’s condition at each decision-making juncture

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What Statutes Apply to this Health Condition (cont.)

• WC: physical and in some cases mental injuries sustained in connection with a job and that arise out of or are incidental to the employee’s performance of services for the employer

• FMLA: – Employee’s own serious health condition – Care for spouse, child or parent with

serious health condition

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What Statutes Apply to this Health Condition (cont.)

• Care for spouse, son, daughter, parent or next of kin in Armed Forces with serious illness or injury; and

• Deal with qualifying exigency related to spouse, child or parent’s active military service

−deployment on short notice of family member; military events; childcare/school activities; financial/legal arrangements; counseling; rest and recuperation; post-deployment activities

• ADA: Physical/mental impairment that substantially limits employee in one or more major life activities

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Compensation • WC: Employers required to carry insurance

providing injured workers with wage loss benefits during any period of temporary disability based on percentage of worker’s wages at time of accident and established by minimums/maximums under state law

• FMLA: No requirement under federal law that the leave be paid

• ADA: No requirement under federal law that the leave be paid

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Health Benefits During Leave • WC: Employer not expressly required by law to

continue to provide health insurance benefits during period of leave

• WC: Employers liable for employee’s medical expenses for work-related injury.

• Many employers simply continue health coverage to defray medical expenses

• In most states, it is permissible to discontinue paying for health benefits coverage during extended leave after employee has exhausted 12-week FMLA entitlement

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Health Benefits During Leave (cont.)

• Any benefit termination should be consistently applied and should not discriminate against employees injured at work

• FMLA: Institution must continue whatever health plan benefits it offers for up to 12 weeks of leave. Employee can be required to pay their portion of premium or lose coverage

• ADA: No requirement beyond FMLA entitlement but must apply any policy discontinuing benefits in a non-discriminatory fashion

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Retirement Benefits During Leave

• Employee entitled to participate in retirement plans to the same extent as employees on unpaid personal or disability leaves

• Employers are not required to make plan payments to any pension and/or retirement plan or to count the leave for purposes of time accrued under the plan during any unpaid portion of leave

• Employer must permit employee to continue to make contributions in accordance with the plan’s terms

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Use of Accrued Sick/Vacation Time During LOA

• WC: Employees can receive payments for vacation, sick leave or PTO without affecting their eligibility for workers’ compensation payments

• Employees can be required to use vacation, sick pay and PTO during any type of disability leave, including workers’ compensation. This may offset their state disability or short-term disability payments

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Use of Accrued Sick/Vacation Time During LOA (cont.)

• FMLA: use of vacation and/or sick leave is optional during periods the employee is receiving any kind of income replacement benefits, such as workers’ compensation, state disability or paid family leave benefits

• Create a written policy requiring employees to use paid leave before taking unpaid or partially unpaid leave

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Vacation Donation • Vacation donation is per employer policy;

some employers permit employees to donate vacation to individuals out on disability leave, including WC leave

• Most employer policies do not permit employees to use donated vacation when they are receiving workers’ compensation benefits

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Return-to-Work • Workers’ Compensation – Permanent &

Stationary • Fitness for Duty Exams • Disability-Related Inquiries

– Job-related & consistent with business necessity

– Second opinions

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Case Study: A Common Scenario

• Employee is injured at work and requires a leave of absence – What kind of leave? Duration? – Income replacement?

• Employee is declared fit to return to work with restrictions – Same position? – What if the restrictions are too limiting?

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• Workers’ Comp. => Until Fit to Return • FMLA => 12 Weeks • ADA => Reasonable Duration

– Measured against institution as a whole

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Remember:

Workers’ Compensation Claim Reporting Lag Median Lag Time

September 1, 2008 – December 31, 2013

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Goal (Admin. Lag) Admin. Lag* Total Lag*

Median Days

* Twelve Month Rolling Average * Admin. Lag indicates the # of days between the claim being reported to the institution and the carrier being notified. * Total Lag indicates the # of days between the claim occurring and the carrier being notified. Updated 1/17/14, Valued as of 12/31/2013 17

• Claims Duration • Return to Work Duration • Increasing Medical Expenses • Litigation

Leading Drivers of Workers’ Compensation Costs

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Claims Handling Basics Prompt Claims Reporting – Why?

• Involve a professional claims adjustor – Reduce the chance for litigation – Detect fraud early

• Begin the accident investigation process earlier and reduce the claim processing time – Enables better opportunity to identify root-cause and

take corrective action

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Claims Reporting Training, Accountability, Procedures – How?

• Your written claims reporting procedure and training should address the following: – When is an Investigation Report required to be

completed? – Where are the Instructions for Completing the Report

Located? • Understand the difference between investigation and report

completion • Build Accident Investigation into the Claims Reporting Process

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• Your written claims reporting procedure and training should address the following: – Where are the blank Investigation Report(s) located? – Who is accountable for completing the various

reports? – Who is accountable for managing the process?

Claims Reporting Training, Accountability, Procedures – How?

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Accident Investigation – Root Cause

• “Root-cause” analysis is a systematic technique that focuses on finding the real cause of a problem and dealing with that, rather than just dealing with its symptoms

• More Simply, “if you address the root-cause, future similar occurrences should NOT occur”

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Claims Handling Best Practice Transitional Duty – Why?

Benefits include: • Reducing recovery time for the injured employee

– Reducing indemnity and medical costs by reducing time away from work

• Sending a clear message to all employees that they are both valued and that "vacations on comp" will not be tolerated

• Enhancing productivity by having injured employee work rather than be at home

• Maintaining employee as part of the workforce team

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Mandatory Components for Success: • Written Policy • Individual and Departmental Accountability • Established Modified vs. Alternative Duties • Provider Involvement • Education on the Benefits (employees and

supervisors) • Support From the Top

Claims Handling Best Practice Transitional Duty – How?

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Other Considerations Best Practice Strategies New Hires

• Pre-Hire Employee Screening – Physical capabilities – Drug screening

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Employee Benefits Strategy • Institution total compensation packages typically

include valuable employee benefits components relating to absence and leave coverage. Ensuring that the components below support each other and that contracts/plan provisions align is critical to achieve desired results. – Short-term disability – Long-term disability – Paid time off – Sick leave

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Employee Benefits Considerations

• Below are items that may impact your strategy and the effectiveness of any absence or leave programs you offer: – Definition of disability – Disability elimination periods – Return to work incentives – Sick leave carryovers/banks – Wellness programs

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For More Information About Employee Benefits

Alison C. Harpster Executive Director of Employee Benefits 200 South Wacker Drive, Suite 1000 Chicago, IL 60606 Phone: 312-568-5516 aharpster@eiia.org

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