Rising workers’ compensation costs are among many employers’ greatest concerns, as large-dollar claims against companies—especially those who employ hourly, blue collar workers—continue to rise. While the laws regarding workers’ compensation benefits vary from state to state, all but one state requires mandatory coverage for private employees. Generally, these mandatory benefits include medical bills, compensation for lost time from work, and permanency benefits for the residual effects of a work related injury. Interestingly, medical services provided on a workers’ compensation case are typically billed at a much higher rate than Medicare, state provided health coverage such as Medicaid, and even private group health insurance. Because of this and other factors, the cost of doing business has taken a significant toll on both the traditional “mom and pop” small employer and large corporations in certain states. While workers’ compensation coverage is a necessary expense for businesses, there are also many indirect costs of on-the-job injuries and accidents, which go beyond your insurance costs. This may include training replacement employees, investigating claims, repairing damaged equipment and property, and implementing corrective measures. Plus, your business may lose productivity and be forced to deal with lower employee morale.

1. 10 Tips for Reducing
Workers’ Compensation
Costs
FEATURING KNELL, O’CONNOR, DANIELEWICZ
June 8, 2017

2. Agenda
What We’ll Cover in Today’s Discussion
• Introductions
• History of Workers' Compensation
• What you need to know about Workers' Compensation: benefits
covered, state laws, etc.
• Direct and indirect costs
• Tips for minimizing costs
• Transitional duty
• IL WC costs
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3. WWW.EPAYSYSTEMS.COM 3
About the Speakers
Webinar Host
Michelle Lanter Smith
Chief Marketing Officer
EPAY Systems
Featured Speaker
Bradley C. Knell
Knell, O’Connor,
Danielewicz
Featured Speaker
Nicole V. Russo
Principal
Knell, O’Connor,
Danielewicz

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5. Legal Disclaimer
The contents of this presentation should not be construed as legal advice or a
legal opinion on any specific facts or circumstances.
These materials are intended for general information purposes only, and you are
urged to consult a lawyer concerning your own situation and any specific legal
questions you may have.
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6. History of Workers’ Compensation

7.  First state based workers’ compensation laws enacted in 1911
 Wisconsin – the first state to draft a constitutional workers’ compensation law
 During the Industrial Revolution, WC laws were very restrictive, allowing employers to
claim 3 significant defenses:
 Contributory negligence: Employer wouldn’t be held liable if worker was responsible for his own
injury
 The “fellow servant” rule: If a fellow employee caused the worker’s injuries, employers were not
held liable
 Assumption of risk: Employees accepted hazards of their work when they signed contracts.
(Many industries had employees sign contracts that relinquished their right to sue for injuries.)
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History of Workers’ Compensation

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What is Workers’ Comp Insurance?
• Workers' compensation is a form
of insurance providing wage replacement and
medical benefits to employees injured in the course
of employment in exchange for mandatory
relinquishment of the employee's right to sue his or
her employer for the tort of negligence.
• Workers' compensation benefits do NOT cover pain
and suffering.

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Evolution to a “No Fault” System
• In modern times, workers' compensation evolved to allow employees injured at work
to obtain payment for lost wages, medical costs, and occupational rehabilitation
expenses without regard to their personal negligence or fault.
• Unlike in a contributory negligence scenario, this means that there does not need to
be litigation over who is to blame for the accident that led to the worker’s injuries.
• Example: Bob, a janitor, spills cleaning solution and slips on a puddle, injuring his
back. Despite the injury being caused by Bob’s own carelessness, he is not
precluded from making a claim for workers’ compensation benefits.

10. What Benefits are Covered?
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• Medical Treatment
• Lost Wages (Temporary Total Disability)
• Permanent Disability Benefits
(Often based on a disability schedule)
• Rehabilitation/Vocational Re-training
• Death Benefits

11. Businesses are, by law, 100 percent responsible for providing workers'
compensation benefits and cannot charge a worker for benefits provided
under workers' compensation or for any portion of the business's workers'
compensation insurance premium.
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Is Coverage Mandatory?
Texas is the only state that does not require employers
to have workers’ compensation coverage.

12. 12
State by
State
Benefit
Comparison
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Why is Workers’ Comp So Costly?
• Medical services usually billed at higher rate than private health
insurance plans and government funded insurance plans
(Medicare and Medicaid)
• States that have a low burden of proof for compensability
• Work injury only need be “a” cause, not primary cause
• Preexisting conditions are not excluded
• No credit for back injuries, prior wage loss
• Medical providers take advantage and establish referral sources to over
treat and inflate case values

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Direct Costs + Indirect Costs
Direct Costs
• Medical Expenses for Injured Worker
o Emergency Room
o Office Visits
o Diagnostic Imaging
o Physical Therapy
o Surgery
• Compensation for Lost Time From Work
• Lump Sum Award of Permanent Disability
• Vocational Re-training

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Indirect Costs
• Investigation of Alleged Injury
o Supervisor time for completing reports
o Obtaining witness statements
o Surveillance
o Background checks
• Expense of Hiring New Employee to Fill Injured
Worker’s Position
• Increase in Insurance Premium Due to Claim Filed
• Safety Training or Development of New Safety Practice
Direct Costs + Indirect Costs

16. Poll Question
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17. Top Tips for Minimizing
Costs
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17

18. Document, Document, Document
• Take a thorough written statement as soon as possible after
the alleged accident
• Consider retaining an independent vendor to conduct a
private accident investigation report.
o Interviews with witnesses
o Written statements from co-workers and supervisors
o Photographs of the alleged accident location
o Investigation of third party subrogation potential
o OSHA or safety investigation
o Police reports filed
Top Tips for
Minimizing Costs:
INVESTIGATE-
Early and
Thoroughly
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19. • Obtain a medical canvass in cases where causation is in
question
o For a flat rate, the canvass will contact providers in a set geographic
radius to determine if claimant has previously treated at the facility
• Determine if any surveillance footage documenting the
alleged accident occurring exists, and compare it to the
described mechanism of injury
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Continued…
Top Tips for
Minimizing Costs:
INVESTIGATE-
Early and
Thoroughly
Video: Woman Fakes On the Job Injury
http://www.fox13news.com/news/251957807-video

20. • Descriptions of injury change, so obtain a detailed
statement as soon as possible after the alleged accident
• Once other parties are involved, the history of injury can
and will change, so it is important to document a detailed
history of injury and specifically the alleged mechanism of
injury
• Secure the statement (in writing) before family, friends, co-
workers, medical providers, and ATTORNEYS get involved
Top Tips for
Minimizing Costs:
DOCUMENT YOUR
FILE - Early and
Often
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21. Develop a list of trusted IME doctors
• The choice of IME doctor is one of the most important parts of
the case, because you are usually bound to that opinion for
the duration of the claim
• Chose wisely…a “good” report from a bad doctor will be of
limited value as litigation progresses
• Be cognizant of the IME doctor’s expertise and credentials in
comparison to the treating doctor. You always want to have
your expert comparable or more qualified that the treating
doctor
• Know how well your doctor will hold up during testimony if you
think the case will proceed to trial
Top Tips for
Minimizing Costs:
CREATE A
NETWORK OF
MEDICAL
PROVIDERS
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22. • Provide your doctor with a strong arsenal of tools to enhance his/her
credibility
o Written job description
o Prior treatment records
• Consider assigning nurse case management early on during treatment
even on an accepted claim
o They can hold treating doctor accountable for “off work” notes
o They can act as a liaison in states where limited or no contact with a claimant’s
treating doctor is allowed
o Will often facilitate a more expedited return to light and full duty
o Can coordinate detailed job video analysis for defense against repetitive trauma
claims
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o Injury reports/statements
o Surveillance, if available
o Diagnostic imaging/films
Continued…
Top Tips for
Minimizing Costs:
CREATE A NETWORK
OF MEDICAL
PROVIDERS

23. • Utilize a Preferred Provider Program
o Some states allow employers to create Preferred Provider Programs (PPP)
for workers' compensation medical care.
o For example, in Illinois, if the Department of Insurance approves the PPP, it
counts as one of the employee's two choices of medical providers. If the
employee does not want to use the PPP, he or she must inform the
employer in writing. The employee can then go to one other medical
provider and that provider's chain of referrals.
• In states that do not provider for PPP, larger employers can
contract with local occupational clinics to refer injured workers for
local, urgent care.
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Continued…
Top Tips for
Minimizing Costs:
CREATE A NETWORK
OF MEDICAL
PROVIDERS

24. Communication
• Maintain open lines of communication to avoid surprises
• Communicate with the injured worker (if he or she is not
represented) to remain informed about medical treatment plans,
anticipated return to work, possible work accommodations
needed
• Communicate with your carrier and defense attorney regularly
regarding case status and investigation.
Top Tips for
Minimizing Costs:
COMMUNICATI0N
IS KEY
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25. • Conduct quarterly (or more frequent) claim reviews. This
will insure that the defense team develops a unified
strategy, will facilitate open communication, will insure that
the claim is advancing towards resolution, and will provide
an open forum for questions, concerns, feedback, and
updated information to be shared with the carrier, attorney,
and employer/supervisor.
• Identify potential witnesses early on and assess likelihood
of cooperation at trial, and potential for bias towards
petitioner
Top Tips for
Minimizing Costs:
COMMUNICATI0N
IS KEY
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26. Safety Incentives
• Make Employees Accountable for Good Safety Practices
o Incorporate Adherence to Safety into Performance Reviews
o Incorporate Safety Violations into Disciplinary Policy
o Require Employees to Sign Safety Handbook
• Provide Incentives for Adhering to Safety Policies
o Offer monetary incentives, bonuses, and rewards for safe practices,
and low/no injury rates
o Provide company sponsored activities to reward safe practices
• Encourage Confidentiality Regarding Claim Settlements
Top Tips for
Minimizing Costs:
EMPHISIS ON
SAFETY IN THE
WORKPLACE
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27. What is Transitional Duty?
• Transitional duty is temporary work that is offered the injured employee before he or she is
fully recovered. The idea is to work while the individual heals. Transitional duty should
always comply with the claimant’s medical work restrictions and should be a temporary
assignment leading to the employee’s normal job.
• Also referred to as light duty or modified duty
What is the purpose of Transitional Duty?
• The purpose of transitional duty is to ease the injured workers back into the workforce by
providing lighter duties as they recover, allowing them a faster return to productivity
without impeding recovery or risking re-injury.
• Studies have shown that transitional duty benefits both the injured worker and the
employer
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Transitional Duty

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Transitional Duty
Benefits to the Injured Worker
• The injured worker avoids being isolated
• The employee maintains contact with the fellow employees
• The employee does not feel guilty and increases his/her level of self esteem
• The employee acclimates more quickly to the full duty job
• He/she maintains a productive mindset and sees management’s commitment to their
well-being
• Odds of returning to full employment drop by 50 percent after just 12 weeks of
workplace absence

29. Benefits to the Employer
• By providing the injured employees the support they need to rehabilitate in the workplace, employers retain
the services of skilled, knowledgeable and experienced employees
o This can reduce the indirect costs of hiring and training replacements for the injured worker
• The employee must report to work rather than relax in the comfortable surroundings of their home
environment
• Communication between the employer and employee is enhanced, face-to-face.
• As the healing process speeds up, medical expenses from prolonged disability cases decrease exponentially
• Hiring and training costs for replacing the employee is eliminated
• Injured employees offered modified duties return to work twice as often as those who aren't and spend half
as many days on sick leave.
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Transitional Duty

30. What if the Employer Cannot Accommodate Light Duty?
• Transitional Duty does not need to be a “job.” For instance, a grouping of tasks over
several hours or days may provide just the needed solution
• Ask managers in your organization to develop “wish lists” of tasks and jobs that they
need to complete but don’t have the personnel or time to complete them.
• Transitional Duty can be facilitated through volunteer work coordinated at an off-site
facility. Offsite transitional duty should be communicated to the employee as a
mandatory extension of his or her employment
o American Red Cross
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Transitional Duty
o Goodwill o Local Shelter

31. • Workers’ Compensation Cost/Payouts are
assessed against the plant’s local office’s
operation cost.
• Eliminate or Mitigate Workers’ Compensation
costs to protect profit.
• Have an effective safety/risk manager that can
implement a viable safety program to prevent
Workers’ Compensation accidents.
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IL Workers’ Compensation Cost to the Bottom Line

32. • In addition, have a reliable and consistent
occupational clinic that can treat workers
immediately after an accident; Why?
o Lock workers into an accurate and truthful medical
history; less likely to lie under duress;
o To reduce “overtreatment exposure”; hopefully you
control the initial treatment “chain of referral”; get the
worker to credible and effective medical treaters;
o Getting the workers back to work ASAP, thus
reducing TTD payout.
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IL Workers’ Compensation Cost to the Bottom Line

33. • Changing Workers’ Compensation Culture
o Goal should be to establish a “fair” but “tough” on Workers’
Compensation claims
o Teddy Roosevelt “Speak softly but carry a big stick”
o Example: 1) Minor injuries = settle on a pro se basis
o Example 2) fraudulent injuries = fight to the bitter end
• Have an effective TPA/Insurance program.
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IL Workers’ Compensation Cost to the Bottom Line

34. • Have effective counsel
o “Team” approach. Do they get along? Do they know your business?
o Have quarterly claim review with plant and TPA
• Use of surveillance?
o Appropriate when you have sufficient information, “not a shot in the dark”
o Providing surveillance to IME/MA’s
• Show up at the IWCC
o Sends a message to the IWCC and the employee that you care about W.C. Employees
talk!
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IL Workers’ Compensation Cost to the Bottom Line

35. Integrated HCM to Help You Manage Workers
Compensation
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