Commercial Insurance Update – Safety Pays

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February 2012

Safety Pays: The Importance of a Safe Work Environment

By Don Phin, Esq. – President, HRTW and Jeffrey Cavignac, CPCU, ARM, RPLU, CRIS – President, Cavignac & Associates

Business owners and managers realize that the cost of a lost workday due to injury is substantial. For every dollar you spend on the direct costs of a worker’s injury or illness, you will spend at least that much or more to cover the indirect and hidden costs. Consider what a lost workday costs in terms of:

• Productive time lost by an injured employee;

• Productive time lost by employees and supervisors attending the accident victim;

• Clean up and startup of operations interrupted by the accident;

• Time to hire or retrain other individuals to replace the injured worker until his/her return;

• Time and cost for repair or replacement of any damaged equipment or materials;

• Cost of continuing all or part of the employee’s wages, in addition to compensation;

• Reduced morale among your employees, and perhaps lower efficiency;

• Cost of completing paperwork generated by the incident;

• Increase in Work Comp modifier and premiums;

• Managing the separate obligations of Return to Work, the ADA and FMLA;

• And more…

There are many factors that impact the safety and Work Comp claims exposure. The employee, including their age, experience, medical condition, stress, sleep, laziness, drug habits, attitude, you name it. The work environment including the quality of equipment, facilities, type of work, and weather. The company’s efforts including pre-hire physicals, safety and injury prevention plans, instruction and training, to name a few.

Here are the most impactful steps you can take to reduce your overall exposure to injuries, safety problems, and claims.

1. Have an Illness and Injury Prevention Plan (IIPP) – Many states (including California) require you to have an Injury and Illness Prevention Program. Whether required or not, this planning process must be taken seriously. There are 8 areas addressed by most IIPP’s:

• Responsibility

• Compliance

• Communication

• Hazard Assessment

• Accident/Exposure Investigation

• Hazard Correction

• Training and Instruction

• Recordkeeping

Injury Prevention Plan templates are readily available for free. For example, you can use the tool produced by OSHA at http://www.osha.gov/dcsp/smallbusiness/safetypays/index.html. California provides a great resource at http://www.dir.ca.gov/dosh/dosh publications/iipp.html.

2. Measure safety – The best written safety and health programs are worthless without management holding themselves and employees accountable for sound safety practices. The old saying that “what gets measured, gets done” is true for safety as well. A sound safety process should have measurable activities and results (e.g. conducting safety training, inspections, number of claims, etc…) Employees are more apt to abide by safety and health requirements if their safety performance is measured and impacts their overall evaluation.

3. Conduct pre-hire/post offer fitness – Bottom line is the last thing you want to do is hire a Work Comp claim! Once a conditional job offer is made you can and should inquire about the job applicant’s medical and Work Comp background to make sure they are “fit for duty”. Remember, this also carries with it ADA accommodation issues if you have more than 15 employees (5 in CA) and if they in fact need an accommodation to do the job.

4. Teach proper posture and use ergonomics – Whether it’s typing at a keyboard, lifting a box, or carrying a cement bag, there is simply no substitute for doing it with the correct posture. One way to help create proper posture is through ergonomics. Anyone sitting in front of a computer all day long should have quality seating, an ergonomic keyboard, and an easy-to-read screen. Anything less not only reduces their productivity, but opens you up to lower back, shoulder, neck, vision, and carpal tunnel claims. If someone is out in the field, there is the right way to pick things up (i.e., bent knees) and there are plenty of tools out there to make a difficult job easier. When you think in terms of ergonomics, you have to think of the long term value of the employee as well as the long term savings of reducing claims costs. To learn more about ergonomics, go to http://www.cdc.gov/niosh/topics/ergonomics/ and http://www.osha.gov/SLTC/ergonomics/.

5. Watch for Repetitive Stress Syndrome (RSS) – Repetitive Stress Syndrome (also known as Repetitive Motion Injury) is the result of repetitive physical conduct, even if it has very little impact or vibration to it. Everyone from the guy at the jackhammer to the secretary at the keyboard can suffer from RSS. Again, one way to reduce claims in this area is to engage in ergonomics as discussed above. Another is to make sure your employees report difficulties to you or your nurse. Good ergonomics, administrative controls, and routine breaks can certainly help avoid RSS claims.

6. Conduct ongoing training – One can only imagine how many times someone was injured while using a nail gun because they weren’t properly trained on its use. The failure to engage in safety training will not only subject you to a hefty Work Comp bill, it can also expose you to fines and lawsuits. Chances are, nobody needs to tell you where people can get hurt in your industry. That isn’t the issue. The issue is that far too many employers think they don’t have the time or money available to engage in safety training. Whether it’s the worker finishing the steeple or the one sweeping up nails, there is a safety component and related training for every position.

7. Monitor equipment safety – If you simply look at the reported OSHA violations, you can see how often they relate to the removal of safety guards on otherwise unsafe equipment. Perhaps it’s simply in need of repair or perhaps the junkyard is more appropriate. Perhaps it’s a great machine, but the safety guard has been removed so the employees can work faster. Equipment checks are critical to a safe work environment.

8. Flooring, lighting, and other environmental factors – a clean work space tends to be a safe one. Good lighting and a fresh coat of paint can do a lot for the productivity and safety of a workforce. Engage the employees in helping to design their workplaces so that they’re productive, enjoyable, and safe. There are a large number of manufacturers producing great flooring materials and other safety equipment you can use.

9. Emergency preparedness – Whether it’s a power outage, a flood, H1 N1 virus, or an injury, there’s no substitute for being prepared. According to FEMA, here are the Ten Most Common Errors Found With Emergency Response Plans:

• No upper management support

• Lack of employee buy-in

• Poor or no planning

• Lack of training and practice

• No designated leader

• Failure to keep the plan up to date

• No method of communication to alert employees

• OSHA regulations are not a part of the plan

• No procedures for shutting down critical equipment

• Employees are not told what actions to take in an emergency

10. Make sure all injuries are reported promptly – There is no substitute for prompt and appropriate medical attention. Injuries that are reported within 24 hours are ultimately resolved for substantially less than those that are not.

11. Pay your own first aid claims – Depending on your state requirements, you may be able to manage any “first aid” concerns without filing a Work Comp claim. A first aid claim is any one-time treatment, and a follow-up visit for the purpose of observing minor scratches, cuts, burns, splinters, etc., which do not ordinarily require medical care.

12. Post-injury drug testing – Many employers will have employees undergo a drug test for any work place accident or near accident. Before you terminate anybody who refuses to take a test, or comes up positive on one, we suggest you contact an attorney. Before you institute drug testing make sure it is supported by state law guidelines. To learn more about Drug Free Workplaces, go to www.dol.gov/elaws/drugfree.htm.

13. Discipline and termination – If an employee engages in an unsafe activity, it should be documented and if appropriate the employee should be disciplined, or even terminated. Of course, the caveat here is to let the punishment fit the crime. It is also suggested that you treat similarly situated employees the same way.

14. Driver safety – Motor vehicle accidents pose a huge challenge for nearly every employer. Fortunately there are a number of driver safety programs available. This can be a whole course in itself, and in fact, there are plenty of them. This big push now relates to “distracted driving” www.cdc.gov/Motorvehiclesafety/. The government even has a whole site devoted to it: www.distraction.gov/. Needless to say, driver screening, vehicle maintenance, and post accident response training are all critical elements to manage this exposure.

15. Sun, heat and other outdoor exposures – More and more employees are filing claims for melanoma developed while working in the field. Heat exhaustion can also be a real problem. There are simple answers for this: proper protective clothing, easy access to water or Gatorade, less strenuous activities during the midday, and sunscreen. Here’s the governments info on it www.cdc.gov/niosh/topics/outdoor/

16. Watch for fraud – The small percentage of fraudulent work comp claims cost U.S. business billions of dollars annually.

Certain types of employees are most likely to file false claims. These include disgruntled employees, new employees, employees without health insurance, employees who are physically active outside of work (the classic Monday morning claim), exhausted employees, and employees who tend to miss doctor appointments, interviews, etc. To learn more go to www.insurancefraud.org/workers_comp scams.htm

17. Document, document, document – It is critical to document those claims you do have. You need to preserve evidence, get photos, video, statements, samples, etc. and do so ASAP! A good investigation will:

• Secure witnesses and injured workers statements

• Provide evidence against fraudulent claims

• Preserve the accident scene at the time of the loss

• Obtain valuable information for any 3rd party recovery

• Provide trend information for identifying problem areas

• Document corrective action taken to prevent future accidents

Final Comment

Ultimately, your Loss Experience will drive your Cost of Risk. The only way to lower your Cost of Risk is to reduce the frequency and severity of the claims that drive those costs. A proactive approach to safety is critical to managing these risks.