All posts tagged claims

Baseline Health Tests Can Shave Workers’ Comp Claims Costs

Digital Tablet with X-ray and Stethoscope

More employers are testing new hires in physical jobs to establish a baseline in case they ever file a workers’ comp claim down the road.

The aim is to establish what physical ailments and pain the new hire already has, so if they are injured you can find out if they aggravated an existing injury or it’s just an existing injury that’s flaring up. And if done correctly, baseline testing doesn’t infringe on the worker’s rights or health privacy.

Baseline testing should not be confused with physical evaluations that are conducted after a job offer, but prior to placement, to ensure the new hire doesn’t have physical constraints that would keep them from performing their job. The data in a baseline evaluation cannot be used for that.

In fact, the data collected in baseline testing is kept sealed from the employer.


How it works

Baseline testing is best conducted on workers in physical jobs.

Baseline tests measure the signals traveling in the nerves and muscles, and include the use of electromyography. The tests are non-invasive and often include range-of-motion testing.

Employers that send their employees for testing cannot view the test results unless the information is needed to confirm or refute a subsequent injury.

If a worker files a claim for a soft-tissue or repetitive motion injury, the employer can order a second test, which will be used by the insurance claims adjuster or treating physician to compare to the baseline test. If there is no change in pathology, the claims administrator can deny the claim and the chances are high it won’t be contested.

To avoid problems with singling out specific workers or disabilities, you should perform this testing on the entire workforce – or at least in all of your physical jobs.

Under the law, you can order baseline testing at any time on any employee, and not just when they are hired.

The good thing about the testing is that it can identify legitimate claims. Since there is a baseline, when doctors compare and see a change in pathology, they can order treatment and workers’ comp insurance pays for it and the worker’s time away from work.

On the other hand, a second test can show irrefutable evidence that there was no chain in pathology and so the injury that the worker is claiming is likely not work-related.



Anecdotally, employers that use baseline testing see tremendous results in their workers’ comp claims.

According to an article in <i>Business Insurance</i>, Wisconsin-based Marten Transport since starting baseline testing in 2015:

  • Has seen its rate of soft-tissue injury claims for new hires drop from 3.3 per 100 new hires to 1.4.
  • Has had only three of the 37 claims filed by new hires in their first six months showing actual injuries beyond soft-tissue pain that was documented when they began working.


Marten Transport conducts the tests as part of its employment agreement and uses a third-party company to carry them out.

The non-profit organization, the Gatesway Foundation, started using baseline testing by contracting with California-based Emerge Diagnostics to rein in its spiraling workers’ comp costs.

It had been experiencing a high share of work-related musculoskeletal injuries (soft-tissue) claims, like injuries to muscles, tendons, ligaments, joints, cartilage and spinal discs.

The year prior to implementing baseline testing, the foundation’s developed claims losses were $1 million. In the first six months of the next policy year, prior to implementing the program, the foundation’s developed losses were $500,000 but, in the latter half of the year – after implementation – losses had dropped to $30,000.

Overall, it reduced claims costs by $316,544 and the program cost $9,200 – a return on investment of 3,441%.


The takeaway
As mentioned, workers in physical jobs are the best candidates for baseline testing. That includes both light and heavy manufacturing, construction, agriculture, cleaning services and movers, to name a few.

But it could also be applied to any job that involves any type of repetitive motion, even without physical exertion.

Agency Mulls Not Counting Portion of First Aid Claims in X-Mods

first aid stuff

California’s workers’ compensation rating agency is developing new guidelines that would exempt a portion of first aid claims from being included in the calculation of employers’ X-Mods.

Under state regulations, employers are required to report injuries that require first aid and are not severe enough for the employee to seek medical treatment or miss work. But despite the rules, few employers report the claims to their insurance companies.

The Workers’ Compensation Insurance Rating Bureau hopes that creating an exemption in the experience rating plan for first aid claims and injuries would increase reporting.

According to the trade press, the Rating Bureau is working on a plan that would exclude a portion of every claim from the X-Mod formula. The amount for that exemption has not been set and it’s likely that the change, even if approved this year, won’t take effect until at least 2017 or 2018.

But regardless, the move would be a welcome development for California employers, many of which are reluctant to notify their insurers of any injuries that involve only first aid treatment for fear that it will affect their X-Mod or because they are confused by the rules. The reporting of first aid claims is typically not mandatory in most other states.

The industries in which the lack of first aid claim reporting is most prevalent are the construction and restaurant industries, but it occurs in other sectors as well, according to the Rating Bureau.

When employers fail to report first aid claims it causes problems for claims adjusters, hinders workers’ ability to access workers’ comp benefits and has a negative impact on the employers that play by the rules and report all of their claims.

Also, what starts as an injury that only requires first aid treatment can later develop into a full-blown claim if the initial injury worsens.

According to the trade publication Workers’ Comp Executive, the Rating Bureau is looking at imposing a first aid claim exemption of $250, $500 or $1,000. It has been testing the different amounts and the effects on ensuring reliability of employers’ X-Mods.


Depending on the amount, it would have a substantial impact on reportable claims:

  • The $250 threshold would eliminate 15% of the claims in the system.
  • The $500 threshold would eliminate 36%.
  • The $1,000 threshold would eliminate 54%.


The biggest concern is that eliminating so many claims could reduce the rating system’s ability to accurately predict system costs and set accurate rates.

The Rating Bureau expects that at the $250 threshold, the change would mostly affect employers who have no other claims and that it would push up their X-Mod by just one percentage point on average.

The committee studying the issue “thought this was a reasonable trade off to get more claims into the system,” David Bellusci, the Rating Bureau’s chief actuary, said during a classification and rating committee meeting in early April, according to the trade publication.

The perception there is that the honest employers reporting all of their claims, including these smaller first aid only claims, are at a disadvantage to employers that are not currently reporting these claims.

Also, the Rating Bureau plans to work Cal/OSHA in regard to changing the definition of first aid. Cal/OSHA regulations do not require that employers report injuries that require first aid to the agency.


Strong Return-to-work Program Key to Keeping Claim Costs Down

return to work

One of the proven ways to reduce the cost of a workers’ comp claim is to get the injured worker back on the job whenever it is safe to do so.

Preferably, employers should offer some type of modified work duty if they are still recovering from their injury and if that injury impedes them from performing the work they did before the accident.

If workers wait until they are completely healed before returning to work, the cost of a claim with, say, $7,000 in medical expenses can quickly balloon to tens of thousands of dollars as they draw temporary disability benefits, often equal to about two-thirds of their salary.

Not only that, but an extended absence can lead to a disability mindset and the employee, having not worked for some time, may feel disaffected from the workplace and unmotivated to return.

Fortunately, a strong return-to-work program offers a path back into the workforce through light duty and transitional work. To keep costs in check, no workers’ comp program should be without an RTW program.

If you have an RTW program or are considering starting one, here are the top 12 things you should consider, courtesy of the Institute of WorkComp Professionals:

  • Understand your state laws about returning an injured worker back to the job and the benefits they are entitled to after taking on transitional or light duty.
  • Create an RTW program that outlines the steps the company will take to help a worker get back on the job as soon as it’s feasible after a workplace injury. Discuss transitional duty and light duty in the program documents and distribute copies of it to your staff.
  • Be creative in identifying temporary alternative jobs. Appoint an employee-management committee to create temporary alternative jobs. Injured employee jobs should be meaningful, not demeaning or demoralizing – and for sure should not be punitive.
  • If you have an injured worker, visit various worksites or departments of you company to identify tasks that are similar to the employee’s existing job.
  • Provide the treating physician with job descriptions for any temporary transitional duty and the employee’s regular work.
  • Obtain medical restrictions from the medical provider and a release so that you can put them in a job that will not strain them or risk reinjuring them. Be proactive and prepared for the release. Don’t wait to have the release in hand before you begin your process – a delay of even a few days costs you money.
  • Encourage treating medical providers to approve temporary alternative duty for injured employees.
  • Communicate regularly (at least once a week) with injured employees returning to work for a temporary alternative duty position. (During this time, therapy and treatment may still continue.)
  • Inform the worker’s supervisors about the injured individual’s physical limitations from the injury and make sure they don’t push them too hard. Closely follow the restrictions outlined by the doctor, or you risk upsetting the worker, or worse, reinjuring them.
  • Continue to pay the injured employee at their regular rate of pay. Consider doing so even if the employee is working partial hours. This will help you avoid paying lost wage benefits and, in many states, reduce future settlements.
  • Keep the employee engaged by asking them on a weekly basis about the transitional duty, to identify obstacles or ascertain if they feel they can do more.
  • Provide feedback to the physician regarding the progress the injured employee is making at the temporary alternative duty position, to make sure the physician is getting both sides of the ‘story.’ It also conveys the concern you have for your injured employees.


If done correctly, an RTW program can help your worker get back on the job faster, help them feel like they are still part of the ‘team,’ improve morale and reduce your workers’ comp premiums.





Cumulative Trauma Claims Rising Fast

carpal tunnel

A new and costly trend is affecting workers’ compensation as more cases involve what’s known as “cumulative trauma” – or injuries that develop over an extended period of time from repetitive or continuous motions.

Often these injuries are due to excessive wear and tear on tendons, muscles and sensitive nerve tissue that can leave a worker unable to perform their job due to pain. They can arise in any profession where a worker performs the same motion over and over again.

Interestingly though, many of the new cases are being filed after employees are fired and they are primarily being filed in Southern California.

A report by the Workers’ Compensation Insurance Rating Bureau of California, the “Analysis of Changes in Indemnity Claim Frequency – January 2016 Updated Report,” found that cumulative trauma cases accounted for 18% of indemnity claims in 2014, up from less than 8% in 2005. The percentage has steadily increased over the past decade, the Rating Bureau found.

According to the agency, the growth in cumulative injury claims beginning in 2009 has been concentrated in claims involving more serious injuries and multiple injured body parts.

The WCIRB, in its “Cumulative Injury Claim Survey” in 2015, noted that the median time before a claim is reported is 79 days from the date of injury.

Also, according to the WCIRB, 40% of cumulative trauma claims are filed after a worker is terminated. Of those cases, a whopping 98% are litigated and 90% are in Southern California.

These post-termination cumulative injury claims were much more likely to involve multiple insurers, psychiatric injuries or multiple body parts, according to the Rating Bureau.

The Bureau also noted that insurers denied 63% of cumulative trauma claims as to all issues (multiple body parts, for example), and an additional 9% were denied in part.

Another sobering bit of news is that most cumulative injury claims involve attorney representation or multiple body parts, and these proportions have increased over the last several years, while the proportion involving a specific claim component, psychiatric injury or sleep disorder has declined.

Approximately 10% of claims that involve some time away from work are estimated to be reported late (up to 18 months after an insurance policy inception), compared to less than 2% for 2007. A significant proportion of these late-reported claims are for cumulative injury claims, which are approximately four times as likely to be reported late as non-cumulative injury claims.

According to the study:

  • 30% of cumulative trauma claims involve multiple body parts
  • 7% involve the lower back
  • 2% involve body systems
  • 7% involve the wrist
  • 1% involve a shoulder
  • 9 % involve multiple upper extremities
  • 9% involve the hand
  • 4% percent involve hand and wrist
  • 6% involve knees


What you can do

Ergonomics – the science of adjusting the job to fit the body’s needs – can prevent cumulative trauma, also known as repetitive stress injuries (RSIs) in workplace safety parlance.

While in some cases redesigning the workplace is the best way to prevent RSIs, often many simple and inexpensive remedies will eliminate a significant portion of the problem.

For instance, providing knives with curved handles to poultry workers, so they won’t have to unnaturally bend their wrists; taking more frequent short breaks to rest muscles; providing lifting equipment, so nursing home workers won’t strain their backs lifting patients by themselves; or varying tasks to break up the routine of activities.

One large airline’s flight reservation facility, with 650 employees, had 250 cases of RSIs over a two-year period. An alarming 30% of these cases resulted in surgery.

The company took some simple steps to reduce the number of RSIs, including hiring an ergonomist to redesign the workstations, developing work/rest regimens, and eliminating electronic monitoring that included disciplinary action based on productivity, among other actions. Since then, the incidence of RSIs has dropped, underscoring the lesson that ergonomics can prevent RSIs.

A nationally known poultry producer instituted an ergonomics program and after two years its workers’ compensation claims had fallen to $1 million a year, compared to $4 million prior to the program.

In one facility, days missed due to cumulative trauma disorders declined from 552 to 24 per year, and days of restricted work went from 1,717 per year to just 48.

Identifying Problem Workers’ Comp Claims, Fraud with Predictive Modeling


With decades of information in their databases, many insurers have started using those statistics to their advantage to intervene earlier in problem claims and to identify potential fraud.

With years of data to rely on, insurers have identified certain triggers that can indicate that a claim may require additional intervention and more hands-on management. The predictive modeling program will alert a claims adjuster when it identifies certain parameters or events.

This early identification of problem claims is helping employers and insurers achieve better outcomes for injured workers, as well as save money and time. As the trend continues, it should help reduce claims costs by eliminating more fraud and also lower the cost of some claims and reduce the time some injured employees are away from work recovering.

Conventional wisdom in workers’ comp is that 20% of the claims account for 80% of the losses. Efforts such as early claims reporting, medical case management and return to work have long proved essential for reducing claims.

Predictive modeling aims to improve the ability of insurers to identify claims that require early intervention.

Insurance predictive modeling applies statistical techniques and algorithms on insurance and claims data to develop variables that predict the likelihood of a particular situation (like a worker staying off work for longer than average).

While predictive modeling has been successful used for years by automobile insurers, it’s been slower to catch on in workers’ comp, particularly because it requires multiple data sets for which data availability can be scarce.

Predictive modeling begins with the first notice of loss and then continues to monitor for certain trigger points and specific actions during a claim’s lifecycle.

In the case of a potentially fraudulent claim, some of these could include the number of prior injury claims submitted by a claimant and the amount of time that an allegedly injured claimant is out of work.


Employer tackles medical costs

Supermarket chain Ahold USA, a self-insured employer, started using predictive modeling in early 2012.

Ahold’s model uses claim characteristics, medical transaction details, and other data sources to identify factors that are predictive of higher claims costs.

Some of the indicators the company uses include multiple visits to doctors and the use of certain prescription drugs.

The model then prioritizes claims that need special handling and medical case management. This helps injured employees receive appropriate medical care to reach maximum medical improvement and return to work sooner.

The company’s predictive modeling can indicate whether a claim has the propensity to develop adversely. It can also be used to evaluate the likelihood that a claim will result in litigation.

It may also provide the ability to identify workers’ compensation claims with a greater likelihood of surgery. Such tools allow adjusters to develop case strategies at first notice and gain control over the claim as it progresses.

The results for Ahold have been positive, resulting in a lower workers’ comp expenditures in “low seven digits.”


Insurer birddogs fraud faster

National insurance company Chubb Corp. has been using predictive modeling for both its workers’ comp and automobile claims.

At Chubb, predictive modeling begins with the first notice of loss and then continues to monitor for certain trigger points and specific actions during a claim’s lifecycle, such as the number of prior injury claims submitted by a claimant and the amount of time that an allegedly injured claimant is out of work.

The model flags claims based on patterns that have historically proven fraudulent and patterns that the claims adjuster may not detect.

If a claim is flagged, the adjuster can investigate further and/or monitor the claim. If certain warning signs appear, the claim is referred to Chubb’s insurer’s special investigation unit. At that point the SIU can work with the claims adjuster to investigate further.

Before predictive modeling at Chubb, it could take up to 180 days to spot potentially fraudulent workers’ comp claims and assign them to the SIU. Now that number is down to six days.

Also, predictive modeling has led to a significant increase in accepted referrals to the insurer’s SIU. As a result, the number of investigation days has decreased, and the company has achieved significant cost savings.


Workers’ Comp Medical Costs Fall in Wake of Reforms

workers comp construction

The workers’ comp reforms in 2013 have generated surprising cost savings in treating injured workers in California, with overall medical costs per claim falling 8% over a three-year period.

That’s in contrast to the years of inflation before the reforms, when the average medical costs per claim were increasing by an average of 6.5% a year. The new study by the Workers’ Compensation Insurance Rating Bureau of California dissected claims costs between July 2012 and June 2015, finding the medical cost savings were greater than originally anticipated.

SB 863 increased benefits effective January 1, 2013 and January 1, 2014 and provided for a number of structural changes to the California workers’ compensation benefit delivery system.

In total, based on the most current information available, the WCIRB estimates the impact of SB 863 is an annual net savings of $770 million, or 4.1%, of total system costs.

The new study, released in early December, looked at the effects of the legislation on the medical costs associated with treating injured workers. The Rating Bureau had anticipated that reforms would cut medical costs, but it underestimated the effects.

These cumulative savings were primarily driven by changes to the physician fee schedule and pharmacy services, which collectively represent around 61% of all medical service payments. The use of medical services also dropped, due to a more stringent regimen of independent medical review (IMR) of claims.

Additional savings were generated by outpatient facilities and medical equipment providers, which when combined, represent roughly 16% of all medical service payments.

Medical-legal and inpatient hospital services, when taken together, represent approximately 23% of all payments and were the only services to register increases in costs per claim over the three-year period.


Other findings of the study include:

  • Payments per claim via the physician fee schedule (46% of all medical costs) decreased by 9% over the three-year study period. This decline was due in part to the introduction a new and more accurate fee schedule that is widely used in many states. That fee schedule took effect on Jan. 1, 2014.
  • Costs per claim for pharmaceuticals (which account for 15% of all medical costs) declined by 22% during the study period. But the legislation did not address drug costs, and the decline was largely the result of a drop in medical service usage – or utilization – due to the increased use of IMR.
    This reduction in utilization had a particular effect on the prescriptions of highly addictive drugs called opiates, such as OxyContin, the outlays for which fell 48% during the study period.
  • Inpatient hospital costs (12% of all medical costs) increased by 14% on a cost-per-claim basis over the study period. The costs declined in the first half of 2013 likely due to the elimination of payments for duplicate surgical hardware enacted by SB 863.
  • Costs per claim for outpatient facilities (7% of all medical costs) dropped 7% during the study period. Since the majority of these payments are to ambulatory surgical centers (ASCs), the primary driver of the savings was the reduction in reimbursements to ASCs enacted by SB 863.
    That said, outpatient facility cost payments started inching higher in 2015 due to upward adjustments in the Medicare ASC fee schedule as well as changes in the types of outpatient services these facilities provide.
  • Costs under another fee schedule for a variety of services like durable medical equipment, prosthetics and orthotics, fell 12% over the study period. The reforms had nothing to do with this, but rather, the costs were affected by changes to Medicare fee schedules.


Despite these results, the Rating Bureau noted that the trend may be reversing. It said payments per claim for all medical services increased 4% in the first half of 2015 from the same period the year prior.


Run FMLA Concurrently with Workers’ Comp for Long-term Absences


Employers that run federal Family and Medical Leave Act benefits at the same time as workers’ comp benefits give themselves more leeway when employees are off work for workplace injuries for an extended period of time, a state supreme court has ruled.

In the case of Kings Aire Inc. vs. Jorge Melendez, the Texas Supreme Court ruled that an employer who laid an employee off who had been out on workers’ comp concurrently with FMLA, but had exceeded the 12 weeks away that is allowed by the law, was entitled to do so.

But regardless of the outcome of this case, employers need to be careful about terminating any workers that are out on workers’ comp.


The case

Here are the facts of the case:

Jorge Melendez filed a workers’ comp claim after he injured his wrist in July 2009, cutting two tendons and the median nerve.

His employer informed him that while he was out on workers’ comp, it would concurrently place him on FMLA leave, which allows eligible employees who cannot perform their jobs due to a serious health condition, to take up to 12 weeks of job-protected leave per year.

After 12 weeks, Melendez was unable to return to work and his employer sent him a termination letter. He later sued, accusing the heating and air company of retaliating against him for filing the workers’ comp claim.

A local court and appeals court sided with Melendez, but the Texas Supreme Court reversed those decisions, saying that the evidence did not support the allegation that he had been fired for the workers’ comp claim. Instead, the employer had rightfully signed him up for FMLA leave and he was fired under the company’s policy, which the employer had enforced equally in four other circumstances before Melendez’s termination.


The lesson

If you foresee an employee missing a long period from work, it is not a bad idea for you to also put them out on FMLA leave to protect your interests, employment law attorneys say. And regardless, employers that fail to provide FMLA protections risk running afoul of the law.

If you do not offer FMLA leave while they are out on workers’ comp, your employee will still have those 12 weeks to use for other potential FMLA-approved leaves.

The two laws have some intersections, as well. For example, where provisions of both laws are running concurrently, an employee may turn down light duty under workers’ compensation.

If that happens, the employee may lose benefits under workers’ compensation, but would retain FMLA rights to a continuation of job-protected leave.

If an employee returns to work in a light-duty capacity under workers’ compensation, employers typically may pay a lower wage than that of the worker’s normal position.

Under the FMLA, if an employee is transferred to an alternate position which better accommodates recurring periods of leave than does their regular position, such a position must have equivalent pay and benefits. However, light duty is generally not an alternative position.


Note of caution

But be aware of the following issues. According to the Department of Labor:

  • If an employee is collecting workers’ compensation in relation to something which is also a serious health condition under the FMLA, the employer cannot require the employee to substitute any paid vacation, personal, or medical or sick leave, for any part of the absence that is covered by the payments under workers’ comp.
  • Similarly, an employee is precluded from relying upon FMLA’s substitution provision to insist upon receiving workers’ compensation and accrued paid leave benefits during such an absence. However, the employer and employee may be able to agree to paid leave to supplement the workers’ compensation replacement income.


Drug Testing in Workers’ Comp Skyrockets

Drug testing of injured workers by treating doctors has skyrocketed over the past seven years as painkiller abuse continues and physicians want to monitor their patients for staying with their prescribed drug regimen.

The use of urine drug testing on injured workers in California increased 2,431% between 2007 and 2014, according to the California Workers’ Compensation Institute (CWCI).

During that period, urine drug tests grew from 10% to 59% of all California workers’ compensation laboratory services, while drug testing reimbursements increased from 23% to 77% of all lab payments in the system.

The rapid increase reflects the growing concern among workers’ comp insurers and employers about workers getting hooked on high-strength pain medications known as opioids, and similar pain drugs.

Other studies by the institute have found that adding opioids into the picture can greatly increase the time an injured worker is away from work recovering, as well as the cost of the claim.

Also, doctors are increasingly using the tests to ensure injured workers are taking the medicines they prescribe. The downside is that the cost of the testing continues to increase and can easily be a few thousand dollars, adding significantly to the cost of claims.

And the trend is not unique to California. In a recent multi-state study by the Workers’ Compensation Research Institute on injured workers with long-term opioid use, the percentage of workers who received at least one drug test increased from 16% to 25%.

Not only are more injured workers being tested, but workers themselves are being tested more, as well.


Here are some other significant findings from the study:

  • Between 2003 and 2012, the average number of drug testing service dates for injured workers who received these services increased by 9% at 12 months post-injury; 35% at 24 months post-injury; and 350% at 36 months post-injury.
  • Among the injured workers who were drug tested, the average number of tests per employee more than tripled from 4.5 in 2007 to 14.9 in 2014, driving the average amount paid per date of service from $96 in 2007 to $307 in 2014 – a 220% increase.
  • The number of providers who were paid for testing injured workers climbed from 428 in 2008 to 876 in 2014. Much of that growth is attributed to a migration towards physician in-office testing, because testing equipment has drastically come down in price.
  • The amount paid for drug tests in California workers’ comp are based on Medicare billing rules. These rules were revised in 2010 and 2011, after Medicare determined there were questionable billing practices for drug tests taking place.
    The CWCI study found that after those changes were made, the mix of tests used on injured workers changed. Drug screens, which are used to identify the presence or absence of a drug, accounted for a smaller share of tests.
    Meanwhile, quantitative tests, which are used to measure the amount of a drug sample, increased sharply. The CWCI notes quantitative tests are not subject to the tighter Medicare billing rules, perhaps explaining the increase.


Is it necessary?

Drug testing is in part related to the increasing costs and prescriptions for drugs in the workers’ comp system, as well as the fact that testing has shifted from labs to doctors’ offices, which can now afford testing equipment that was too expensive in the past.

Several medical treatment guidelines do call for doctors prescribing opioids to also test for illicit drug use under certain circumstances, such as when addiction or abuse is detected or when patients are at risk for overdose and death, sources said.

Doctors need to identify patients abusing drugs because it is inappropriate to provide them opioids and it can change the treatment required for them.

Proponents of drug testing say it helps keep injured workers’ medicinal intake in check to ensure they are sticking with their drug regimens and also not abusing prescription pain medications.

Tests revealing that patients are using drugs for other than “clinical health” can also help workers’ comp payers arguing before a judge or hearing officer regarding their responsibility for the claimant.

The purpose of testing is to assist in medical management. Still, testing should be done based on medical necessity related to a claimant’s medical presentation, dispensed drugs and evidence-based medicine protocols.


Business Umbrella, Excess Liability Insurance Essential as Costs Rise

As a responsible business owner you no doubt make sure that you are properly insured for any liabilities resulting from damage to other parties.

Imagine some of the following scenarios:

  • What if a visitor trips and falls at your business, breaking a leg and is unable to work for a few months while they recover?
  • What if a customer suspected of stealing later proves their innocence and sues for defamation of character?
  • What if one of your employees, driving a company truck, rams into a passenger car and severely injures some of the occupants?


The costs of a large financial settlement could surpass the primary liability limits of your existing insurance policies, leaving your business responsible for the rest of those costs. And a high-cost accident or lawsuit could potentially put your company out of business.

To avoid any of these scenarios, it’s wise to carry a commercial umbrella policy, which will essentially pick up where your primary insurance leaves off – or runs out.

All of your policies have limits. Once those limits have been breached, the other party can sue and go after your firm’s assets. Breaching those limits is getting easier due to the increasing prices of vehicles as well as health care costs, should the other party suffer physical injuries.

An umbrella policy will also cover you for liability for which there is no primary insurance, or when a primary policy includes an exclusion that the umbrella policy doesn’t.

An umbrella policy will kick after limits are breached for:

  • Commercial general liability (bodily injury, property damage, personal injury, defense costs and attorney fees, limited contractual liability)
  • Business owners liability
  • Business auto liability
  • Employers liability


Most umbrella insurers require you to purchase primary insurance coverage before selling you an umbrella policy. For example, general liability insurance, auto liability insurance, workers’ compensation or employers liability insurance.

Umbrella policy limits may range from $1 million to $10 million, depending on the policy and the insurance company underwriting the policy.



Excess liability

For companies that have potentially higher liabilities, an excess liability policy can be secured that kicks in after the umbrella policy is breached.

This coverage provides extra liability limits over an umbrella policy, and typically follows the terms of the first underlying insurance policy.

Higher limits may be necessary for businesses with high loss potential, high profile, sizable sales, numerous assets, large auto fleets, worldwide presence, and/or significant public exposure.


Why workers’ comp claims spike in the summer months

Workplace injury rates rise during the summer months. When summer rolls around, companies in many sectors, including agriculture and construction, significantly increase production.

Increased road construction raises risks for workers and drivers. Many of the newly hired workers are young and inexperienced, creating a high potential for workplace injuries.

Toiling in the sun is also a leading cause of weather-related injuries, including heat stroke, heat cramps and heat exhaustion. Heat illnesses occur when the body overheats to the point it cannot cool off, even with profuse sweating.


Young workers

Too often, young workers enter the workforce with little or no on-the-job safety training, heightening safety risks.

Recently, the Washington State Department of Labor & Industries released a report showing that teens are twice as likely to be hurt on the job as adults.

In Washington state, a total of 547 youths aged 17 and under were injured in the workplace in 2014, up nearly 14.7% over the previous year. Of the total, 173 were in the food and hospitality industries. The next largest total, 80, was reported in both the retail trades and agriculture.

Falls to the floor increased 77%, to 55 cases, as the chief cause of injury.

Young workers, aged 14 to 24, have more accidents because they lack the knowledge, training and experience to prevent them. Some common issues employers encounter with young workers are:

  • They do not understand what can go wrong.
  • They do not always follow the rules.
  • They fail to use personal protective equipment (PPE), or use it incorrectly.
  • They horse around on equipment.
  • They do not ask questions.
  • They think they are infallible.


It’s also important for supervisors to recognize the physical, cognitive and emotional developmental differences between young and adult workers. It takes extra effort to train and supervise seasonal employees on working safely.


Here are some training suggestions:

  • Repeatedly demonstrate job procedures and safety precautions. Don’t overlook the basics, such as starting and stopping equipment.
  • The step-by-step instructions for any task must include the task’s hazards and how to avoid them. Take the time to clearly explain the risks of not following the proper steps. Use examples.
  • Explain when and how to use PPE, as well as where to get it, how to inspect it, and how to remove and store it properly.
  • Train one-to-one with young workers and observe them performing tasks.
  • Encourage them to report problems and to ask questions.
  • Assign specific clean-up tasks and emphasize the importance of a clean, clutter-free worksite.
  • Control the hours worked. Many popular summer jobs, such as construction workers, landscapers and jobs in hospitality and food industries, require long hours of work in the heat that can lead to fatigue, inattention and stress, increasing the likelihood of injury.
  • Provide a mentor.
  • Demonstrate that safety is a priority at your facility. Words aren’t enough. New workers also need to see actions that reinforce the message: clean worksite, properly labeled hazardous substances and readily accessible safety data sheets, workers wearing required PPE and who are concerned about workplace safety and show it, and so on.


Heat illness dangers

While there are many excellent resources on dealing with heat, it’s important for employers to recognize that there are individual differences among workers and those who are struggling may be hesitant to complain.

The American Society of Safety Engineers calls heat the “unseen danger” at construction sites because the symptoms of heat illness can be subtle and misinterpreted as mere annoyances rather than signs of a serious health issue.

Workers new to outdoor jobs are particularly vulnerable. Implementing an acclimatization program, providing adequate water and frequent breaks are all critical, but the best way for employers to prevent heat illnesses is to consistently interact with workers to gauge how they’re feeling and provide current information on weather conditions.

Also, using apps, such as OSHA’s Heat Safety Tool, is a good way for workers to monitor their risk levels.  You can find it here.