Overview - The Workers' Compensation System

Each of the states, territories and Canadian provinces has its own Workers' Compensation (WC) Law, and its own level of benefits, but all include some level of the following five benefit types:

  • Indemnity payments, to reimburse the employee for (part of) his or her lost wages.

  • Payments to medical providers for services rendered.

  • Scheduled benefits to the employee for loss of a limb, disfigurement, etc.

  • Payments to rehabilitation providers to assist in rehabilitation and return to work.

  • Survivors' benefits for burial and some replacement of income.

Covered losses include:
  • Accidental injuries

  • Occupational disease

  • Cumulative trauma injuries

  • Mental injuries

Injuries not covered by workers' compensation include:
  • Intentionally self-inflicted (all but 3 states)

  • Sustained while attempting to injure another person

  • Caused by employee's intoxication (all but 6 states)

  • Caused by employee's willful misconduct

  • Caused by willful failure to use a safety device (but not if employer failed to enforce) (a few states)

Claim Management
The Wrong Ways

Some mangers or organizations adopt a posture of benign neglect. They see a problem and hope it gets better. These managers often abandon responsibility for the active management of the claim to the injured employee, the insurer, or the physician/health care provider.

Others take an aggressive approach. They believe that there are no "legitimate" comp cases. They often adopt an "Us vs. Them" philosophy, and believe that the WC system automatically benefits the employee.

Oftentimes, organizations fall into a combination of first two. They ignore the problem until it's a high value claim, and then blame the employee. The result is often a high-cost, lump-sum settlement.

The Right Way - A Managed Approach

The right way to manage claims requires management attention to seven basic actions:

  • Report and investigate claims promptly

  • Focus on the problem claims

  • Select appropriate medical care

  • Keep communications open

  • Implement a return-to-work program

  • Manage contested claims

  • Manage your insurance carrier or TPA

Report and Investigate Claims Promptly

There are statutory limits on the filing of claims by employees - 60 days to 2 years, but many states include language that says "as soon as practical" or "excusable." More important, there are tighter requirements on reporting by the employer. States vary in what types of accidents/injuries must be reported to the state (e.g., deaths, disability of more than 3 days). Time limits on reporting vary (typically 2–10 days), and there are fines for nonreporting/late reporting. Regardless of state reporting though, all claims should be reported to the insurance carrier.

In the employer's/supervisor's section of the First Report of Injury, give full details on the accident and allegations as you know them, but don't speculate on the diagnosis or prognosis. Follow the insurer's recommendations on transmitting the claim - fax is preferred over mail. Studies have proven that quicker reporting results in lower overall cost.

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