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NEWSLETTERS
NEWSLETTERS
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561-683-8383
November 2006 |
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In this issue
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Actual case of a worker who left alternative duty without notice: What should the employer do? |
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Clients save $186,000
Advisor makes startling Experience Modification factor discoveries |
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Don't go the audit route alone
The typical audit process inherently works to your disadvantage |
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Actual case of a worker who left alternative duty without notice: What should the employer do?
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An employee originally asked for alternative duty for a "tennis elbow" or "sprain." There was no mention of this condition being work related. To make a long story short, the employee left the job, later indicating that the alternative duty caused her pain and that she was going to go out on Short Term Disability.
When she gave the forms to the doctor, he claimed it was Workers' Comp, after treating her for four weeks but never completing the Worker's Comp injury form required by the state.
The employee came back to the employer with a doctor's note indicating Workers' Comp. The insurance company denied the claim for lack of medical evidence to support the doctor's contention that the injury was work related. At that point, the employee engaged the services of a lawyer.
The employer sent out an offer of alternative duty on Friday. When the employee arrived for work on Monday, she met with the employer and discussed job duties. The employee was then advised to report any difficulties to her supervisor or the HR person.
She left without giving notice to her supervisor and told the receptionist she was not coming back.
What action should the employer take? Contact the employee? Let her go for leaving without notice as specified in the company's employee handbook? If she quits, how does that impact her case?
Recommendation from a WorkComp Advisor: Understanding why she left is the challenge. Don't assume anything. No fault attendance policies are still subject to ADA, FMLA and Workers' Compensation anti-retaliation parameters.
Send a note to the employee recapping the events, including her comment to the receptionist that she was quitting. Indicate that if she does not provide a legitimate response within three days as to why she quit, her resignation will be accepted. Send the note by Certified Mail. Also, attempt to do an exit interview and document thoroughly.
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Clients save $186,000
Advisor makes startling Experience Modification factor discoveries
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One of the competencies of a Certified WorkComp Advisor is the ability to identify and solve Workers' Compensation problems, particularly those that are often overlooked by others. This detailed detective-type work illustrates the validity of the process developed by the Institute of WorkComp Professionals in terms of the significant pay off it can have for employers.
One Advisor's diary is a catalog of catastrophes that were averted in a variety of industries. It points the value that a properly trained Advisor brings to clients:
* January: Helped a former client recover 52 Experience Mod points for three years due to a subrogation recovery of a 2001 claim that either wasn't reported correctly or missed by the current insurance agent. Result: recovery of $17,000.
* February: Assisted a client recover 13 Experience Mod points for three years due to a 1999 subrogation claim that was not reported correctly. Result: recovery of $14,000.
* February: Assisted a client with claims that were coded and then reported incorrectly to NCCI by the carrier. This led to a recovery of 17 Experience Mod point for three years. Result: recovery of $8,000.
* April: Assisted a client with 90% of their claims for two years that were coded and reported incorrectly to NCCI by the carrier. We recovered 41 Experience Mod points for two years. Result: Recovery of $37,000.
* April: Assisted a client recover 40 Experience Mod points for three years due to errors in statistical coding to NCCI by the insurance company. Through additional consulting, the client has saved an additional $29,000 on classification corrections from the last audit. Results: a recovery of $46,000 plus a savings of another $29,000 or a total of $75,000.
* May: Assisted a client with claims that were coded and reported incorrectly to NCCI by the insurance carrier. This led to an Experience Mod recovery of 29 points for two years. Results: a recovery of $7,000.
* May: Assisted a client with claims that were coded and reported incorrectly to NCCI by the insurance company that resulted in a recovery of 26 Experience Mod point for four years. Result: Recovered $7,000 for the client.
* June: Helped a client with claims that were improperly coded and reported to NCCI by the insurance carrier and recovered 12 Experience Mod points in two years. Result: $7,000 recovered. There will be addition premium savings in the third year.
* August: Assisted a client with claims which were reported incorrectly by the carrier and recovered 80 Experience Mod points in three years. Result: recovered $28,000.
Advisors know the importance of verifying Workers' Compensation data. As these accounts indicate, it makes a difference to clients having an Advisor who takes the necessary time to make sure the records are correct.
Q&A: Employers Ask about Workers' Comp
Q. "Why do some larger Workers' Comp claims increase premium less over the three-year payback period versus smaller claims that increase premiums more?"
A. Frequency of claims as well as severity impact the calculation of the Experience Modification factor. The experience rating formula has a greater impact on the first $5,000 of each claim, and a lesser impact on costs over $5,000. So, one claim of $100,000 will have less of an impact than ten different claims, totaling $100,000.
There also is a cap or maximum amount that affects the claim.
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Don't go the audit route alone
The typical audit process inherently works to your disadvantage
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Many businesses accept on "good faith" that the Workers' Comp audit is done right. Because your actual insurance cost is only determined after your policy expires, it is essential the audit is correct. Yet, the audit process is complex and prone to many errors and omissions.
Certified WorkComp Advisors (CWCA) understand the rules and are trained to find the problems and keep you from being overcharged. You wouldn't allow an IRS Agent to conduct an audit without an expert at your side. Why allow an insurance company's auditor to conduct an audit without an expert in your corner?
Here are some of the reasons overcharges occur in the typical audit:
*Misclassification. There are over 600 types of classifications in the Workers' Compensation manual. Auditors often start with all payrolls in the highest rated code or they may change classifications to a higher rate, even though this often may not be done retroactively.
* Excluded remuneration. Auditors fail to check for all types of excluded remuneration. While rules and definitions vary, overtime, tips and gratuities, dismissal or severance payments except for time worked or accrued vacation, active military duty, payments into a qualified third-party trust for the Davis-Bacon Act or similar prevailing wage law, valid business expense reimbursements, use of company-provided automobiles and employer contributions to employee benefit plans are just some of the types of remuneration that often inflate payrolls.
* Executive payroll. Auditor may fail to identify all of the executive names and therefore, the payroll is not capped.
* Subcontractors. Certificates of insurance are not obtained from subcontractors. Auditor searches the general ledger, adds the uninsured subs, uses full contract price, rather than payroll costs.
CWCAs know the rules and help you control the audit by properly building an audit package prior to the audit. This saves both you and the auditor time. Working with the auditor, our approach is not adversarial, but professional and the results are an accurate, overcharge-proof audit.
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