Business Insurance

August 6, 2012

TRENTON—Exclusive remedy provisions prevent a New Jersey man from suing his workers compensation insurer over pain and suffering caused by its failure to pay his medical bills, the New Jersey Supreme Court has ruled.

In a 4-1 ruling last week, the court said that New Jersey workers comp law prevents most tort cases against insurers, even if they "intentionally delay making payments that the… court has ordered."

The plaintiff in Wade Stancil vs. ACE USA argued that tort cases should be allowed against "recalcitrant" insurers. But the state Supreme Court said that such companies are held accountable under a 2008 amendment to the workers comp law, which allows courts to find insurers in contempt for failure to comply with orders.

Mr. Stancil injured his neck, back and shoulder while working for textile manufacturer Orient Originals Inc. in 1995, court records show. A New Jersey workers comp court ruled in 2006 that Mr. Stancil was totally disabled by his work accident.

In 2007, a workers comp judge ordered ACE USA to pay Mr. Stancil's medical bills. The judge in that case said ACE USA had a history of failing to make medical payments in workers comp cases and warned the insurer against further violations, court records show.

After ACE USA failed to pay the medical bills by October 2007, the workers comp judge advised Mr. Stancil that he could sue the insurer in New Jersey Superior Court. At that time, the court noted that it had limited authority to force ACE USA to pay Mr. Stancil's costs.

If employers want to keep their workers comp costs down and thereby reduce their premium, they should always be looking to keep their injured employees happy.  If the employee is already injured and out of work, make sure he or she is getting paid.  Of course you want to make sure that they are getting better over time and you want to follow up on this. But making them disgruntled when they are going to get paid and get their medical bills paid anyway, is simply shooting yourself in the foot. The process should run smoothly. The employee should feel that the employer cares about him or her, while at the same time the employer must get the message across to the employee that they would like to see the employee get better and get back to work as soon as possible.  All this story reminds me of is basically an insurance company or an employer leading their employees straight to a lawyer’s office, where then the odds of a cooperative employee will go down drastically. While we’re on the topic of employers reducing their workers comp costs, employers should consider workers compensation premium recovery and workers compensation audit as the quickest and easiest solution to obtain refunds and reduce workers comp premium costs.

Business Insurance

July 26, 2012

The average duration of workers compensation temporary total disability claims benefits increased during the first half of 2011 in correlation with the struggling economy, according to a study by NCCI Holdings Inc.

The Boca Raton, Fla.-based ratings and research organization said Thursday that the average duration for TTD indemnity benefits was 149 days in the first six months of last year. That compares with 147 days in 2010 and 144 days in 2008, the first full accident year after the Great Recession began.

“TTD duration, like the unemployment rate in many states, did not drop right after the recession, but remains at a higher level than it was prior to the recession,” NCCI said in the analysis of 2.6 million TTD and permanent partial disability claims in 45 states between 1998 and June 2011.

Claims from contract workers, such as roofers, had the highest duration of any industry group, NCCI said, because employees in that sector tend to experience more severe claims than other industries.

Rising temporary total disability durations mean rising experience modifications for employers. An easy way for employers to recoup some of their money from higher workers comp premiums resulting from poor claims experience is workers compensation audit.

Business Insurance

July 25, 2012

Workers compensation insurance prices rose about 9% during the second quarter, Liberty Mutual Group Insurance's President and CEO David H. Long said today during a quarterly results teleconference.

And the insurer is still seeking price increases across all its commercial-lines business “led by workers comp and property,” Mr. Long said.

“I have said it before, much more is needed for us and for the industry to become profitable in that line,” he said.

His statements are just one more confirmation that you can expect workers compensation renewal pricing to continue trending up.

The easiest way for employers to keep their workers compensation costs down is to make sure that their premiums are being calculated correctly. You'd be surprised at how many premiums are incorrectly calculated year after year and how much the employers end up overpaying. In no time at all, you can find out if you're being overcharged or confirm that you've been paying the proper premium. You have nothing to lose. Sign up for our workers compensation audit.

July 11, 2012

hr.com

Healthcare Employers Turn to Wellness Programs to Suppress Rising Costs

In 2012, roughly two-thirds of healthcare employers experienced increases to their medical insurance premiums, according to the 2012 Compensation Data Healthcare survey results. The average increase reported by these organizations was 8 percent, down from 9.5 percent reported in 2011 and 9.4 percent in 2010. Despite the drop in the average premium increase, healthcare organizations still contribute 9.5 percent of their total payroll costs toward providing medical insurance to their employees. Employers everywhere are looking for ways to curtail rising healthcare costs and as a result, many are turning to wellness programs.

For years, wellness programs have consisted of traditional options such as weight management, tobacco cessation programs or offering flu shots and immunizations. But over the last few years, some wellness options have shown a more accelerated rate of use. Biometric screenings, which measure an individual’s blood pressure, body mass index (BMI), cholesterol and blood glucose in an effort to identify risk factors, are a good example of this trend. In 2009, biometric screenings were offered at only 16.9 percent of healthcare organizations surveyed, compared to 36.1 percent in 2012. Physical fitness facility access, onsite health clinics and offering rewards and incentives have also increased over the last few years.

"The upshot of a well-executed wellness program does not lie just with reduced medical costs," said Amy Kaminski, director of marketing for Compdata Surveys. "Many employers are experiencing a positive impact on their bottom line as a result of greater employee productivity and reduced absenteeism."

Other methods used by healthcare employers to reduce and contain costs include using a network of healthcare professionals at 79.7 percent, increasing the employee portion of the premium at 65.3 percent and offering disease management at 62.8 percent. Nine percent of healthcare organizations report a surcharge for enrolling an employee’s spouse on their medical plan, if the employee's spouse is eligible for benefits under their employer's own plan.
 

As employers face rising premiums in healthcare and workers compensation premiums, many are turning to wellness and safety programs in order to lower costs. Although these programs are beneficial and can have a positive effect in the long run, they can cost a lot of time, money, and resources to implement. With workers compensation premium recovery, employers see immediate results with significant refunds on overpaid workers comp premiums, lower experience modifications, and future savings to keep.

Modified Ex-Mods Penalize Poor Risks

Business Insurance – Roberto Ceniceros

July 16, 2012

Employers with poor loss histories will pay even more for their workers comp coverage starting next year as most states change the way premiums are calculated. But policyholders with proven risk management practices and safety programs that reduce workplace injuries will benefit from NCCI Holdings Inc.'s change in the methodology determining an individual employer's experience modification factor, experts say. The Boca Raton, Fla.-based National Council on Compensation Insurance helps 38 states set their workers comp rates. The ex-mod changes begin with Jan. 1, 2013, policy purchases or renewals. It marks the first time in two decades that the rating organization has updated the “split point” used in its experience rating plan to more accurately reflect individual employer loss frequency and severity. An employer's ex-mod factor has a significant affect on employer expenses because underwriters rely on them to adjust premiums with credits or debits. Every NCCI state has approved the split-point adjustment, said Peter Burton, NCCI's senior division executive for state relations. NCCI's change could have a “material” impact on individual employers' premiums, said Pamela F. Ferrandino, casualty practice leader, placement for Willis North America Inc. in New York. “What we will see this do is really reward companies that have worked hard to improve and maintain their loss profile,” Ms. Ferrandino said. “Those risks that really have better-than-average experience benefit from being better than average.” But employers “with bad experience are going to see a higher apportionment of debits” added to their pricing, while those with a good loss history will see more credits, said Bill Carney, vp and chief underwriting officer at Accident Fund Holdings Inc. in Lansing, Mich. “So it really underscores the need for employers to invest in loss control, invest in safety, invest in their people and have a very strong return-to-work program,” Mr. Carney said. “That is regardless of (employer) premium size.”But midsize employers with guaranteed-cost insurance policies will see a greater impact from the split-point change than will larger employers, Ms. Ferrandino said. That is because larger employers are more likely to employ risk managers and safety personnel, and they tend to maintain large deductibles, sources said. But even larger employers will have to beef up their pre-loss safety programs and solidify their post-loss practices, such as modified-duty return-to-work programs to get the best insurance pricing, Mr. Carney said. “If they were doing a good job before, they need to do an even better job now if they are having problems with their loss experience,” Mr. Carney said. “If you are a large employer and (already) have a high-debit mod, you are probably going to have a higher debit mod after these changes. ”There are other implications as well. Large construction project owners, for example, often choose contractors based in part on the builder's ex-mod, which likely will change. And NCCI's ex-mod change comes amid firming pricing for workers compensation coverage, which could accelerate some employers' shift from guaranteed-cost programs to buying loss-sensitive policies in order to pay lower premiums up front, sources say. NCCI's ex-mod change calls for increasing the experience rating split point from its current $5,000 to $10,000 in 2013. It will increase to $13,500 in 2014 and to $15,000 in 2015. In future years, it will be indexed for claim-expense inflation. A workers comp loss up to the split point is known as the “primary loss” and reflects frequency of such claims, according to NCCI documents. The amount of loss above the split point is referred as the “excess loss” and reflects severity.“Under this split-rating method, actual primary losses are given full weight in the experience rating formula while actual excess losses only receive partial weight,” according to NCCI. The biggest impact, therefore, will be on pricing, particularly for employers experiencing high-frequency, low-severity workers comp claims in the states where NCCI helps determine rates, said Richard Pankhurst, a director in the insurance advisory practice at PricewaterhouseCoopers L.L.P. in Austin, Texas.Mr. Burton agreed. “It is a plan that is heavily leveraged on frequency of loss vs. severity of loss because those are the types of injuries that get controlled by employers through their safety programs,” he said. Yet employers should not lose sight of mitigating high-severity losses, Mr. Pankhurst advised. The split-point change is needed because the average claim cost has increased threefold since the last update, rendering the current experience rating plan less sensitive to reflecting an individual employer's risk experience, NCCI said. For insurers, the impact will be revenue-neutral because they will collect more premium from employers with greater losses and less from those with fewer losses, said Insurance Information Institute Inc. President Robert Hartwig. But insurers will benefit as accounts will have greater incentive to improve their loss experience, making them more profitable, Mr. Hartwig said. Employees also will benefit from workplaces that now have a greater incentive to reduce injuries, he added.

As I wrote in a previous blog, the new NCCI experience rating split point change will increase premiums for employers with debit experience mods. Safety programs will help employers reduce premiums in the long run.  However, in many cases, results are hard to measure. Furthermore, as I have repeatedly pointed out, safety programs will not help with the effects of the 2013, 2014, and 2015 split point change.  This is further explained on the experience rating split point change page on our website.  On the other hand, workers compensation premium recovery is the only solution that offers immediate results that will impact the 2013, 2014, and 2015 experience mods. The best part about workers compensation refunds is that there are no out of pocket expenses with our no-recovery no-fee program.