By: Anthony J. Caruso, Jr., Esq.

Worker's compensation is a major cost factor in doing business for most employers. Therefore, the economy and business necessity require that worker's compensation costs be closely scrutinized through employers' active participation in the system.

Below are several areas that affect worker's compensation cost factors. Employers should analyze and review them as applicable to their own companies.

Safety/Accident Prevention

The best method of controlling worker's compensation claims is to prevent accidents from happening. Most safety experts agree that a comprehensive safety program is worth the effort in reduced worker's compensation costs.

Safety programs should do the following:

• Stress a clean and safe work environment - free of harmful conditions and hazardous chemicals.
• Utilize in-house and outside safety experts, ergonomists and insurance consultants.
• Educate all employees as to the proper procedures for the use of equipment and their anatomy.
• Eliminate any repetitive task or individual act likely to cause injury.
• Provide preventative appliances such as wrist splints and back supports along with ergonomically designed work areas.
• Comply with all Occupational Safety and Health Act, federal and state regulations.

Today, the key is prevention in the reduction of unsafe acts and worker's compensation claims with the associated costs.

Employer/Employee Relations

A happy employee is probably less likely to file a worker's compensation claim than a disgruntled one. Studies have shown that good employer/employee relations may reduce the number of nuisance or questionable worker's compensation claims. The employer's approach should be to:

• Fairly compensate legitimate claims - strenuously defend questionable ones.
• Communicate continually with the injured employee as to his/her well-being, medical treatment and return-to-work status.

• Arrange for the prompt payment of the employee's lost time benefits and medical bills, if justified.

Accident Reporting and Investigation

OSHA and state worker's compensation laws require employers to report worker's compensation injuries and occupational diseases in a timely manner. The reporting process mandates some type of employer investigation. Thus, the nature and extent of the employer's investigation may determine if an alleged injury is compensable.

An accident reporting and investigation system should include:

• Notice to all employees as to the accident reporting procedures and the proper chain of command for notification to supervisors.
• Designation of an appropriate individual to gather and freeze the facts of an alleged injury (i.e., securing witness' statements).
• Monitoring procedures as to the claim's status with the worker's compensation carrier or representative and the appropriate state agency.

The time and effort spent in accident investigation reduces worker's compensation costs by eliminating questionable or fraudulent claims.

Medical Benefits

The employer and the employee have rights and responsibilities as to medical benefits under state worker's compensation laws.

Depending upon the state, the employee's right to choice of treating physician or doctor in the chain of referral may be limited. To reduce medical costs related to compensable accidental injuries/occupational diseases, the employer or its representative should do the following:

• Attempt to direct the injured employee for treatment by the approved company medical provider. This allows the employer to control indirectly the extent of medical care and cost.
• Obtain second opinions by qualified physicians when surgery is recommended.
• Secure independent medical evaluation of the injured employee when the medical care seems excessive as compared to the alleged injury.
• Arrange for extensive hospital and doctor bills to be audited for necessity and reasonableness.

Medical treatment is a major cost driver in the worker's compensation system. Controlling medical charges will significantly lower worker's compensation dollars spent on an injured employee.

Lost Time/Permanent Disability

Generally, an employee is entitled in all states to compensation for lost time incurred as a result of a worker's compensation injury. In addition, the injured employee (in the majority of states) is entitled to compensation for permanent disabilities. Employers may regulate employees' entitlement to these benefits through the following approaches:

• Establish a light duty/restricted work program if required by business necessity, and if it complies as a reasonable accommodation under ADA.
• Consider using vocational rehabilitation experts.
• Secure the injured employee's return to work with another employer when appropriate.

• Obtain an independent medical evaluation of the injured employer to minimize any compensable permanent disabilities.

Insured v. Self-Insured

In all states, employers have an obligation to pay worker's compensation benefits to injured employees. This obligation may be paid directly by an employer on a self-insured basis, by a worker's compensation insurance company or by a state fund.

Some states (for example, Illinois) allow employers to be insured or self-insured (individually or in a pool/trust of self-insured employers). An employer should consider these factors in selecting insured versus self-insured status:

• In a competitive market state, secure quotes from your insurance broker for a number of worker's compensation carriers.
• Make sure the party underwriting the risk has assessed your employees in the proper job classifications and rates in determining the insurance premium.

• Arrange for an analysis of your company's potential for self-insured status. Check out self-insured pools/trusts for your industry.

Questions? Please contact WS Attorney Tony J. Caruso in our St. Charles, IL office at (630) 377-1554, or ancaruso@wesselssherman.com.