Risk manager with a purpose!

I had the pleasure of getting to know a risk manager yesterday, albeit via telephone.  Angel Guerra-Chagolla is a native Californian and graduate of Cal State San Bernardino.  The reason I was so impressed, was that she exuded leadership.  In today’s business world, it’s a rare thing to run into a true leader.  Most folks in the corporate world become lost in their own search for corporate success – corporate climbing.  However, instead of claims and insurance, the first subject we discussed were the upcoming Female Empowerment Seminars she’s created and her hopes of guiding more women forward toward careers in risk management and other related fields.  I had never noticed before, but women in risk management are few in number.  The majority of risk management professionals are male and while there are many women in the insurance claim field and human resources, their inclusion in the risk management profession has lagged.  She wants to change that!

Ms. Guerra-Chagolla will be hosting the Sisters in Business Female Empowerment Seminar on September 27, 2018 at the Dave & Buster’s Event Center in the Ontario Mills Mall from 10 a.m. to 3 p.m.  Attendance is free and lunch is included. Female Empowerment 1

A second seminar is scheduled for October 4, 2018 from 10 a.m. to 3 p.m. at Trader Vic’s in Emeryville, CA.  Both fliers are included here!Female Empowerment 2

We wish Ms. Guerra-Chagolla well in her endeavors!

Three character traits of a top TPA claims examiner!

Sometimes, I’m amazed at what little thought goes into selecting a claims examiner to work on your claims.  However, the most frightening thing to me is that many self-insured employers don’t consider that they’ve put their $5 million dollar security deposit and millions of dollars of reserves in the hands of  individuals who have limited education; are reactive by nature and have little financial education.  More frustrating, is when an employer refuses to consider the issue.  This the main reason we’ve been talking with employers about workers comp claims program oversight!

In any case, here are our thoughts on the three character traits every claims examiner should have:

  1. Friendly, empathetic communicative manner.  Saves the employer thousands of dollars in litigated claims, because a sympathetic/empathetic ear can steer an injured worker away from legal representation!
  2. Financial education.  Whether in college or other learning institution, an examiner needs to monetize the risk of a claim throughout the life of the claim.
  3. Proactive attitude.  By nature, the claims practice of every TPA and insurance carrier is reactive.  If it were proactive, they wouldn’t make any money, but that’s another story.  A proactive approach means that the examiner isn’t waiting to move on claims when their diary comes due.  The wait time creates impatience in injured workers and they seek the sympathetic ear of an attorney.

Our Workers Comp Employer School and WC Claims Oversight service addresses these issues and more.  Feel free to call or write us at (949) 830-2027 or glortiz@bmawest-msa.com

Why workers comp claims oversight can work for you!

Workers comp oversight is one of the most effective tools for reducing your overall workers comp losses!  Solving your work comp challenges and reducing monetary losses should be a high priority on the company agenda.  Today, more than ever, oversight and advocacy needs to be implemented in order to curtail losses.  In California, a Division of Workers Compensation study, showed a 7% rise in medical costs in indemnity claims.  There could be a number of explanations for this, but one ting that must be considered is the drop in experience and expertise of the claims examiners entrusted with handling your millions of dollars of claim reserves.  This drop in expertise can only be explained as an after effect of insurance third-party administrators and “expert” service provider’s greed.  By seeking out equity investors, these organizations must commit to a healthy return on investment for their equity investors.  That means they need to cut costs somewhere and that’s usually the talent.  This is just something for you to consider.  It’s also a call to self-insured employers to begin a proactive approach to their claims program.  Claims Oversight and work comp advocacy can turn a work comp program around!   Our Workers Comp Advocacy and Claims oversight program provides some of the following services at more than half the cost of hiring another employee to do the job:

  • Establish goals & objectives for the employer claim program
  • Review of loss runs
  • Review of expert provider panels
  • Return to work design and coordination.
  • Oversight of insurance company’s reserving logic, decision logic, and claims closure.
  • 90 day written reports on all claims and telephonic review meetings with the employer.
  • Coordination of AOE/COE claim investigations as soon as they occur.
  • Evidence & subrogation identification and collection
  • Witness identification and interview (bilingual Eng/Span)
  • Interventions and resolution of issue with administrator or vendors
  • Claim review attendance
  • Monitor & assess high dollar resolutions on large excess complex claims.
  • Ongoing consultation and advocacy work on legacy files.

Workers comp claim oversight of your third-party administrator or carrier can help to reduce your X mod, reduce outstanding reserves, limit claim life and save on growing losses.  The great thing about this program is that it’s so affordable!

Our program employs the best workers comp claims and risk experts in the country with an average of 20 years’ experience!  Our team is committed to changing your workers comp outcomes!

Call me with questions and to schedule a time to take control of your workers comp program!  (949) 830-2027 or write glortiz@bmawest-msa.com

Proactive work comp claims settlement can save millions in long term costs! It’s well worth the try!

Implementing a proactive workers compensation claims settlement program, cities, counties and public entities can save millions in long term costs.

Question 1 – What do the following cities have in common?
• Atlanta
• Los Angeles
• Santa Monica
• Philadelphia
• Pittsburgh, PA
• Berkley, CA
• Marion County
• San Bernardino, CA

Question 2 – What do these two public entities have in common?
• Pittsburgh, PA
• Marion County

The answer to question number one is that these public entities are/were all suffering from the gross increases in workers compensation costs that threaten their very existence.  The answer to question number two is very simple.  These two entities took a proactive approach to reducing their workers compensation claims losses.  While a few of these entities took the time and expense to audit their claims administration program, the most obvious course of action was overlooked – settle the claims.

Too many answers and not enough focus
A few entities on the list believed that enhancing their loss control procedures would help to alleviate their troubles.  Another was focused on fraud.  All audits did identify the same departments as creating the bulk of the claims – police, fire and public works.  The most frequent and costly were the police and fire departments. The audits also identified issues with claims administration, training and labor unions.  While these entities are correct in their findings, it’s a combination of all of these that create the multi-million dollar losses that threaten these and all public entities throughout the country.

Many contributing factors
There are other issues that directly impact claims costs such as the growing girth of aging
American workers, a decline in professional claims handling education and best practices, collective bargaining agreements and a lack of effective Early Return to Work (ERTW) programs.  However, from a fiscal perspective, which is really what matters, the growing inventory of future medical and long term litigated claims are the culprits.  The fact that the police and fire departments file an excessive number of claims is symptomatic of the employment culture.

Taking a proactive approach to claims
Pittsburgh and Marion County both recognized that in order to repair or preserve their entities and the tax dollars supplied by the people of their respective jurisdictions, they needed to cut long term costs such as medical and legal and reduce their reserve exposure.  The only way to do this is by settling claims.  In Pittsburgh, a massive audit into the finances of the city showed that 21% of workers comp payments in 2003 went to former employees injured over 20 prior.  The restructuring plan devised for the City of Pittsburgh, entitled the Act 47 Recovery Plan, included the implementation of a workers comp claims settlement program.  By settling out claims, the city would save millions in long term costs and reserves.  The story was similar in Marion County, where reserves were reduced the following year by $2 million dollars.  The realization being that legacy claims (cases over five years old) cases get worse with time and significant dollars can
be saved over time by ridding the claims inventory of the old dog files.  It’s simply a numbers game. Forget the nature of the claim and focus on the numbers.  If a claim can be settled for less than the total exposure, in spite of the issues of the claim, then a lump sum settlement should be pursued.  Doing so can save thousands, if not, millions in
taxpayer dollars, medical expenses, legal fees and excess insurance costs.  The effect of
proactive claims approaches such as this reverberates throughout a city, county or school district.  There is a positive trickle-down effect for the public entity, and the taxpayers it serves.  It’s a good business decision.

We’ve had the pleasure of working with public entities for the past thirteen years and have helped them close hundreds of claims by targeting certain claim types, valuating them and moving them into a settlement position.  The use of structured settlement solutions have saved these same entities hundreds of thousands of additional dollars.  A future medical claim settlement project should be no more complicated than that.  Always remember that an injured employee would much rather have medical control over their injury, rather than waiting for his/her claim to come up again on an adjuster’s diary.  Proactive is the word!

What has equity investment done to workers comp insurance?

Risk & Insurance magazine reported on the 2014 National Workers Comp & Disability Conference and a panel discussion called, Buying in to Workers’ Comp.  In the article Hunter Philbrick, managing director of  Hellman & Friedman, is quoted as follows:

“I think you will continue to see significant activity in the workers’ compensation space,” said Hunter Philbrick, managing director of Hellman & Friedman, whose firm (along with Stone Point Capital) acquired Sedgwick Claims Management Services in 2010 and sold it to Kohlberg Kravis Roberts & Co. earlier this year.

P/E firms get a bad reputation for ripping apart companies, he said. “That’s a very small minority and not really true of any of our firms up here.”

Philbrick was joined on the panel by Jeffrey McKinney, managing principal of Odyssey Investment Partners, which acquired majority interest in York Risk Services in 2010, and acquired and later sold One Call Care Management; and Camilo Horvilleur, principal of H.I.G. Capital, which acquired PMSI Group in 2008, selling it in October 2013, after which it merged with Progressive Medical and became Helios.

Of course the attendees at the panel were impressed.  After all, their interest was likely to gain equity investment, use the vacuum cleaner sales model to sell their products or services in order to generate the appearance of growth for the equity investor, whose sole intention it is to sell the company for a huge profit.  But has equity investment improved the workers comp environment or has it created an ambivalence in purpose and loyalty?  Who would have thought that nurse case management services could be sold using the vacuum cleaner sales model?  For those of you who don’t know the vacuum cleaner sales model refers to the sale of a product or service by a company using a large sales force and supporting it with a contracted or very small support group.  That’s how companies make money mass producing products and services – through volume sales.  Other than the volume sales, has equity investment of workers comp companies and service providers improved our “industry”?  Take a look around.  It hasn’t created more jobs, in fact, the industry has contracted.  More importantly, have employers, the folks we have a fiduciary responsibility to, gained anything from this type of  insurance model?  Have employees recovered and returned to work in greater numbers?  Have all these volume sellers, instead, created a regular feeding ground of sales and profit that will suffer if litigation were to fall significantly, TTD periods reduced and employees were to return to work in greater numbers?  It’s hard to see when one is in the midst of the storm and much easier to assess the damage or improvement from a different perspective.  However, a look from a different vantage point may provide some answers.

Aging Workforce and the Impact on Future Medical Claim Inventories

According to a 2006 study by the National Council on Compensation Insurance,
with respect to medical severities, older workers experience relatively more higher-cost injuries, where the most notable differences in diagnoses involve injuries to the joints—rotator cuff and knees. The overall theme of the study was to show that older employees (aged 46 – 64) experience injuries of greater severity and tend to suffer a greater number of cumulative trauma injuries, which equals a greater cost to employers.

For employers this equates to a very costly future medical inventory. A recent study by the PMA  Companies and PRIMA, showed that self-insured public entities cited as a major concern a combination of the aging workforce and comorbidities such as obesity, hypertension and diabetes within the workforce.  For future medical claim inventories, this translates to work-related injuries becoming more severe as the claimant ages. The severity of these work-related injuries becomes increasingly more expensive to treat as the claim ages.

A study by third-party workers compensation administrator Athens Administrators found that future medical claims have increased proportionately relative to all workers’ compensation open indemnity claims, in both number of total open claims and total
reserve dollars. According to their study completed in 2009, they can be open for as many as 8, 10, or more years; have $40,000 or more in reserves; and can represent 35% of a total open indemnity inventory.

Employers, especially public entities and their claims administrators are fast approaching a tipping point where their future medical inventories far outnumber the open indemnity cases, tying up hundreds of thousands if not millions of dollars in reserve funds.  Reducing future medical inventories through lump sum settlements and administrative closures after two years is the immediate answer to this issue.  Establishing an employer compelled legacy settlement program for the TPA would surely save far more money over the long run than the costs of the settlements themselves.  More importantly, establishing aggressive claims handling protocols; hiring well-educated, proactive claims handlers can limit the amount of reserve money tied up and can help to eliminate the culture of entitlement established over the years, especially on the public entity level.

Setting the path for Return to Work

  • Step 1
    • Stay in touch with the employee.  There’s nothing lonelier than making your way through the hoops and obstacles that comprise the workers comp system.  Doing it alone without the guidance and support of the employer or claims team magnifies the isolation of a work-related injury and is more likely to lead the injured employee toward litigation.  Once that occurs, the goals and objectives of the attorney and insurance carrier devise an expected outcome that does not include your employee returning to work and costing the employer significantly.
    • Some things employers can do after an injury (if it’s not too serious) is sit down with the employee and read the information on the workers comp injury claim form.  Fill out as much as possible for the employee and help them fill out their portion.  Discuss what will happen next in terms of medical treatment and return to work.  It’s very important to reassure the employee that medical care will be provided and a portion of their wages will be paid to them while they are on the mend, but the main focus will be on helping them return to work.  If the employer has been proactive, there will be an inventory of possible alternative (or light duty) work that the employee will be welcomed back to until they are fully capable of returning to work in their usual occupation.
  • Step 2
    • Create a job analysis.  If the employer is proactive and if it is feasible, a general job analysis of each occupation in the company is archived in a job analysis binder.  The job analysis describes the claimant’s job in minute detail in terms of physical requirements, i.e lifting , sitting, standing, etc.  A very important aspect of this activity is to identify the purpose of the employee’s job.  This makes it easy to identify the essential aspects of the employee’s job, which in turn, will allow for the temporary or permanent elimination of non-essential aspects of the job making it much simpler to accommodate an injured employee after an injury.  If physical restrictions prohibit the employee from performing an “updated” version of their job, this process can be repeated for other occupations in the company that will allow for the accommodation of the injured worker’s restrictions.  The point is to walk through this process with the employee, which can keep an employee from seeking legal recourse, because the employee is unsure of what the next step is.  This is simple customer service.  Car dealers go through these steps with prospects and even provide “loaner” cars for owners while their car is being serviced.
  • Step 3
    • Use the job analysis in order to obtain work capacities and work restrictions.  When you drive the employee down to the doctor’s office, make sure to provide the doctor with a copy of the job analysis so the doctor may address work restrictions and capacities that could return the employee back to work.  Make certain to obtain a copy of the doctor’s opinion on the work restrictions and capacities.  Some employers wait for the insurance carrier to handle these steps and obtain the work restrictions.  While I’m sure that the carrier representative is capable of handling this aspect of the claim, most claim representatives take on average two to three weeks (at times even longer) to handle this aspect.  The employer can save the expense of temporary disability benefits if they are proactive and handle this aspect of the claim themselves.  There are firms, like BMA West, that handle these aspects of the claim in quick fashion.
  • Step 4
    • Once the restrictions and capacities are in hand, head back to the workplace and check to see if he or she is able to accomplish the essential aspects of the job, the employer may make accommodations and adjustments to the job that will allow the injured worker to stay in their original position.
    • Otherwise research the equivalent jobs on site that will accommodate the employee’s restrictions.
    • The employer may also provide a lower grade job, if accommodations will allow the employee to do the new job and no equivalent job was available.
    • As a final resort the employer may simply assign varying tasks the employee is able to accomplish until he or she is fully recovered.

The important thing is to maintain an open, ongoing communicative relationship with the employee as a method of inclusion.  This is the basis for workers comp advocacy.  The employer should monitor and follow-up on the accommodation and medical treatment until the employee returns to work and the eventual claim conclusion.

Workers comp advocacy is simple customer service.  Actually, its top notch customer service.  While employers don’t currently value the painstaking efforts of caring for others, they do when they realize a reduction in premiums, overall losses and improved morale.  This approach minimizes litigation risks and allows for excellent return to work results!  The State of California Division of Workers Compensation provides an adequate handbook on return to work.  My only qualm with the handbook is that it is written and sponsored by insurance carriers, medical corporations and other insurance related profit makers.