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August 8, 2011  

Contractor Dies After Falling 30 feet at Local Plant

A man working on a construction project at the coastal Hyperion wastewater treatment plant near Playa del Rey was killed last Tuesday after 30-foot fall. Los Angeles city firefighters were called to the plant and found the worker dead at the scene.

The Hyperion Treatment Plant, Playa del Rey, CA

The man, who was not an employee, was erecting a 30-foot wall panel at the plant according to the state Division of Occupational Safety and Health (Cal/OSHA).

The man’s employer is a Stanton-based general contracting firm which has been working at the plant to construct a gas compressor facility that will replace equipment built in the 1950s. The incident is believed to be the plant’s first construction-related fatality since the plant was first modernized in the 1950s.

This incident is a strong reminder of the importance of carrying workers’ compensation insurance. Even more notably, the importance of making sure any subcontractors you have working for you carry workers’ compensation insurance. No matter if you’re a professional consultant, or a large construction company, you MUST be certain any independent contractors you hire carry workers compensation insurance and show you proof with a certificate of insurance before working any jobs for you. Otherwise, you as the employer are liable for any work related injuries or loss.

Have them furnish you with evidence of coverage with a Certificate of Insurance. Mark their policy expiration down on your calendar to remind yourself to request a renewal Certificate before their policy expires. (While you’re at it, make sure their general liability coverage is also listed on the Certificate and that you’re named as an Additional Insured)

Your workers’ compensation insurance carrier will want to see copies of your independent contractor’s workers’ compensation certificates. Without the certificates, your carrier may consider the independent contractors your employee and charge you an additional workers’ compensation premium at the time of audit.

A good rule of thumb is to have ALL your workers, whether employees or independent contractors, covered by workers’ compensation insurance. Numerous court cases have ruled the hiring party is responsible for injuries to independent contractor’s employees when the independent contractor did not have their own workers’ compensation insurance.

–JK

June 24, 2011  

What Is A Workers Compensation Insurance Experience Rating?

I attended a workers compensation related seminar this past week on the subject of  insurance and more specifically, the infamous “experience rating.” Five minutes after the seminar began, I was reminded how complicated the subject is when it comes to the statistics and calculations of experience ratings. I figured it would make a good insurance blog topic if I could somehow weed out the x’s and o’s and put it into layman’s terms on what it all means to you, the business owner who has an experience rating tied to your workers compensation insurance policy.

What is an experience rating?

California’s workers’ compensation experience rating system is a rating system intended to provide employers a financial incentive to reduce work-related accidents. It’s a method for adjusting premium rates to reflect an individual employer’s claims history. Essentially, it predicts an employer’s future losses based on past experience and compares the loss or claims history of one company to all other companies within the same industry/classification.

Employers may receive discounts off their premium for good claims records or may be surcharged for their poor claims records.

There are approximately 500 different business classifications used to describe the various types of businesses in California. Businesses assigned to your SIC (standard industry classification) are relatively similar to your business, however, there are differences which can have an impact  on workers’ compensation claims costs. To address these variations and encourage workplace safety, experience rating adjusts the premium  you pay either upward or downward based on a comparison of your company’s history of payroll and claims to what is expected for businesses of similar size within the same industry classification. This comparison results in your “experience modification.” An experience modification greater than 100 results from less favorable loss experience compared to the average of other similar businesses, and vice-versa, an “ex-mod” less than 100 results from more favorable loss experience compared to the average of other similar businesses .

Experience rating places more emphasis on the frequency of injuries than on the severity. An employer with one large loss ($100,000) will pay less for future insurance than an employer with 10 smaller lost time claims of $5,000 each – a total of $50,000 in losses. Experience rating cushions the blow of a large loss, but hammers employers with frequent losses.

What is the need for experience rating?

  • To provide a direct financial incentive for employers to reduce accidents and encourage safety– This allows employers to develop loss control programs and establish safety programs which create premium incentives.
  • To distribute the cost of insurance equally among employers in an industry classification– The reality is there is no “average” employer for a given classification code. The experience modification takes this into account to encourage the emphasis on loss control. Differences in management practices and methods of operation are reflected in final premium.

Who gets experience rated?

All California employers meeting minimum qualifying premium (Qualifying premium for 1/1/2011 is $16,700 and is amended annually). This accounts for approximately 120,000 employers in CA. Qualification is automatic and mandatory.

So what does this mean?

The science to determining your experience modification is pretty complicated. What you need to know is you want to keep your experience modification down, as it will bring your workers compensation premium down. To do help do this, you should  develop loss control and safety programs to control work related injuries. It starts with you. Your management practices and methods of operation are reflected in your final workers compensation premium. If you don’t know where to start, contact your agent or carrier. Insurance carriers will help customize a loss control program for your business. They want to control loss just as much as you do.

Resources: WCIRB California; State Compensation Insurance Fund

–JK 

June 15, 2011  

Safety First: Ladders

Yesterday I received a call from a client, a contractor, reporting that one of his employees fell off a ladder and broke his elbow on the job on Monday afternoon. As the employer, he did the right thing in seeking immediate medical care for the employee at the nearest medical facility. He obtained as much information as he could about the injury and supporting info from the employee’s personnel file including name, address, phone, DOB, SS#, date of hire, and wage info.  We called in the claim this morning to the carrier and a claim adjuster is now working with our insured to guide him and the employee through the treatment process.

Safety In The Workplace

Statistics show that falls from ladders injure over 20,000 workers annually. Some injuries result in permanent disabilities and even fatalities. If you’re working in a job capacity that calls for ladder use, be sure to make ladder safety a high priority for your employees. By following these safety guidelines, you can help prevent ladder accidents.

Safety starts before the ladder is even mounted.

  • Before using any ladder, check its condition. Make sure there are no broken, cracked, or missing rails and that rungs are not slippery from grease or oil.
  • Check for damage or corrosion on metal ladders.
  • If a ladder is in poor condition, don’t use it. Report the problem so it can be tagged and repaired.
  • A competent person should periodically inspect all ladders and remove damaged ladders from use until they are repaired.

When choosing and using a ladder, keep the following in mind:

  • Choose the appropriate type and size ladder for the job, including correct fittings, and safety feet.
  • Near electrical conductors or equipment, use only ladders with non-conductive side rails.
  • Set the ladder on solid footing, against a solid support.
  • Place the base of a straight ladder out away from the wall or edge of the upper level about one foot for every four feet of vertical height.
  • Be sure straight ladders are long enough so that the side rails extend above the top support point by at least 36 inches.
  • Single cleat job-made ladders should be 15 to 20 inches wide with ladder cleats uniformly spaced 12 inches apart.
  • Never try to increase the height of a ladder by standing it on other objects, such boxes or barrels, or by splicing two ladders together.
  • Portable ladders should be tied, blocked or otherwise secured against movement.
  • Keep ladders away from doorways or walkways, unless they can be protected by barriers.
  • Keep the area around the top and base of the ladder clear. Don’t run hoses, extension cords, or ropes on a ladder; these may create obstructions.
  • To avoid slipping on a ladder, check your shoes for oil, grease, or mud and wipe it off before climbing.
  • Climb the ladder carefully, facing it and using both hands. Use a tool belt or hand line to carry materials.
  • Most ladders are designed to hold only one person at a time. Two persons may cause the ladder to fail or be thrown off-balance.
  • Don’t lean out to the side when you’re on a ladder. If something is out of reach, get down and move the ladder.
  • Ladders should never be used sideways as platforms, runways or scaffolds.
  • Choosing and using ladders wisely is a step in the right direction.

Source: State Compensation Insurance Fund 

–JK

May 19, 2011  

Ten Steps You Can Take To Lower Workers Compensation Costs

Hurt On the Job

Workers’ Compensation insurance can get costly and is a big pain in the butt for some businesses. In fact, the costs to carry coverage can even threaten the existence of some small businesses, especially in states such as California. The good news is that the insurance market is currently “soft”, meaning lower rates than we have seen in the past five plus years. However, it’s pretty much a guarantee the pendulum is just beginning to turn and we’re going to see work comp rates creeping upwards again as healthcare costs have skyrocketed, among other things.

Workers Compensation premiums are based in part on some things which you have little or no control, such as the type of industry your business is in, or the region or state you’re located. But rates are also based on things you do have some control over, such as your claim history and payments.

Here are 10 steps you can take to help lower your Workers’ Compensation costs:

  1. Match the applicant carefully to the job: Base the match on the applicant’s skills and abilities. Your careful hiring practices can go a long way toward reducing your costs. The Department of Fair Employment and Housing offers brochures to help guide you in conducting job interviews. Note: Discrimination because of a handicap is unlawful.
  2. Make safety a priority on the job every day: A safe workplace can lower your claims costs. It is far less expensive to prevent an accident than to pay for one.
  3. Fix dangerous conditions: When you become aware of a hazard on the job site, take appropriate corrective measures. Your failure to do so could result in a “Serious and Willful Misconduct” suit against you. This suit carries severe penalties that you would pay, not your insurance carrier.
  4. Train Supervisors: Workers’ compensation law includes supervisors in the definition of “employer.” When a supervisor fails to follow the law, it counts against you. Make sure your supervisors know all that is required of employers.
  5. Report employee injuries: As soon as you are aware of an injury, notify your insurance carrier by completing and sending the Employer’s Report of Occupational Injury or Illness form. The report requires you to provide information that includes the nature of your business, the type of employee injury or illness, and how it occurred. Your complete statements in each of these sections are necessary for determining the appropriate benefits. For example, information about your employee’s work hours and salary is necessary for computing benefit payments.
  6. Provide the employee claim form: You must provide the employee with a Workers’ Compensation Claim Form within one working day of learning of an injury. The employee should return the completed form to you. When you receive the employee’s claim form, make sure you sign and date it. You must then immediately forward the original to your carrier. The first indemnity payment is due within 14 days of your knowledge of a disabling injury. Failure to provide timely benefits may result in a penalty. The penalty may cost you, the employer, if findings indicate that you did not file the claim form with your carrier on time.
  7. Exercise medical control: Be sure to refer all of your injured workers to your carrier’s Medical Provider Network (MPN) physician. If you do not know of a physician or medical facility, contact your agent or carrier. Be sure to post notices with the name, address, and phone number of your medical provider so your employees know where to go in case of an injury. If the employee has previously notified you in writing of his or her personal physician, the employee has the right to be seen by that physician.
  8. Communicate with your employees: Show them you care about their well-being. If an employee sustains an injury, stay in touch throughout the recuperation period.
  9. Consider a Return To Work program: A Return To Work (RTW) program can help bring your injured employee safely back to work as early as possible. You adjust the transitional job to accommodate the employee’s improving condition until he or she can return to his or her usual duties. You reduce your costs; your employee can return to a self-supporting status; everybody benefits.
  10. Maintain records: Your personnel files can be of great assistance to your carrier in dealing with some cases. Information about an employee’s job description, wages, previous work history, recreational activities, any current work problems, and previous injuries is essential when fighting disputed claims.

As with any type of insurance, contact your insurance agent or carrier if you have questions on your workers’ compensation coverage, or if you need help controlling your costs. Insurance carriers have just as much incentive as you to prevent and/or mitigate loss, so there are risk control options to help.

March 29, 2011  

Dude, Where’s My Arm?

File this one under bad trips, the Montana Supreme Court ruled a Montana man is entitled to receive workers compensation insurance benefits after being mauled while feeding bears at an adventure park…….after smoking pot. Yep, the man got high before he stepped into a bear pen to feed the omnivores. Shouldn’t he be chillin’ on the couch be playing Madden or something instead?

The court ruled that the man was an employee who had been compensated and was “within the scope of his employment” while working at the park. His impairment wasn’t a “major factor” in his mauling since there wasn’t specific evidence about his level of impairment . Also acknowledged was the fact that grizzlies are “equal opportunity maulers.”

Some notable analogies from the judge: “when a grizzly bear is sighted on a trail in Glacier National Park, the trail is closed to all hikers, not just the hikers who may have recently smoked marijuana.” And, the owner “installed multiple electrified fence lines at the bear park to separate the grizzly bears from all customers, not just the customers who may have recently smoked marijuana.

On the flip side of the story, the park owner claimed the man was really a volunteer. It was discovered that the adventure park didn’t even carry worker’s compensation insurance.

Really? You own an adventure park with wild animals and don’t carry workers compensation insurance? I don’t know who’s more foolish, the guy getting high before feeding bears, or the owner of an adventure park, with a bear pen, who doesn’t carry workers compensation insurance?

Luckily for the baked bear feeder, he was able to recover some of his medical expenses stemming from the attack.

I’m not advocating smoking marijuana, but if you choose to, don’t step into a cage to feed wild animals! What a buzz kill.

–JK

Source – KXLU – Helena, MT

March 1, 2011  

California Business Owner Convicted of Insurance Fraud

Here’s a word of advice for you: If you’re a business owner, make sure you’re accurately reporting your payroll on your workers compensation insurance policy. If you are using subcontractors/ independent contractors to perform services for your clients, you must obtain a certificate of insurance from these contractors confirming they carry their own workers compensation insurance coverage. If not, you may be liable for any losses that occur as a result of the services they are performing for your business.

Here’s a friendly reminder that it doesn’t pay to cheat the system:

California insurance commissioner, Dave Jones, announced in a press release on 2/23 the conviction of a California business owner for insurance fraud and perjury. The case involves a $1.6 Million penalty for failure to pay premiums and failure to accurately report payroll.

Ronald J. Haas Sr., 69, has been convicted on 10 counts of insurance fraud for failing to accurately report payroll and for failing to pay insurance premiums to his workers’ compensation insurance carriers.  Haas was sentenced to one year in the county jail and restitution to the entities involved, and three years probation.

“Workers’ compensation insurance fraud is an egregious offense and it will be fully investigated by my Department,” said Commissioner Dave Jones. “Those who would seek to cheat a fund to help workers who were legitimately injured will be prosecuted to the fullest extent of the law.”

On January 12, 2007, State Compensation Insurance Fund Special (SCIF) reported a suspected fraudulent claim to the California Department of Insurance Fraud Division for investigation of suspected workers’ compensation insurance premium fraud. The report alleged that Haas, President of R J Haas Construction Corporation, et al., Saratoga, CA, failed to accurately report employee payroll to his workers’ compensation insurance carrier, SCIF. From July 1, 1998 to June 1, 2005, Haas claimed that he had no employees and that sub-contractors did all the work for his company. However, during this period, four workers’ compensation claims were filed by injured employees. Haas reported payroll to SCIF only after an injury was discovered and then payroll reporting stopped shortly thereafter, with the cancellation of his policy. Subsequently, Haas obtained workers compensation insurance policies through First Comp and again reported minimal to no employees.

An investigation by the Silicon Valley Regional Office of the California Department of Insurance, Fraud Division and the California Employment Development Department (EDD) revealed that Haas misrepresented office staff, project superintendents, foremen, and even some of his own family members as subcontractors. A forensic audit was conducted and revealed that Haas owed $594,293.22 in insurance premiums to SCIF, $229,167.71 in insurance premiums to First Comp and $813,328.27 to EDD for failing to accurately report employee payroll for the purpose of determining employment tax liabilities.

On April 29, 2009, Haas was arrested for felony violations of Insurance Code. Haas is eligible to apply for a home electronic monitoring program in lieu of county jail time. At time of sentencing Haas had already paid the full amount of restitution owed to insurance carriers SCIF and First Comp and to EDD.

Source: California Department of Insurance

-JK

February 1, 2011  

NY Tortilla Factory Shut Down After Fatal Work Related Accident

Earlier this week, a Brooklyn, NY tortilla factory employee died after falling into a waist-high dough mixing machine. Now, the state has closed the factory because authorities discovered the company’s workers compensation policy had lapsed in March 2010.

A NY State Workers Compensation spokesman said, “The owner would need to get the insurance and pay fines before he is permitted to reopen.” While the Workers Comp board doesn’t always shut down companies where the insurance is lapsed, the fact that there was a workplace death prompted officials to visit the tortilla factory. As it stands, the company owes $56,000 in penalties. OSHA and the Department of Labor are also looking into the incident.

This $56,000 in outstanding penalties is sure to be dwarfed by lawsuits likely to be coming from the employee’s family and surviving members. All this could have been avoided or significantly curtailed if the factory owner carried the workers compensation insurance coverage required by law.

The very core of workers compensation insurance is that it provides medical care for employees who are injured in the course of employment. Beyond medical care, Workers Comp insurance provides temporary and/or permanent disability benefits, supplemental job displacement benefits or vocational rehabilitation and death benefits. Workers Comp is a trade-off between employers and employees. Employees receive prompt effective medical treatment for on-the-job injuries or illnesses no matter who is at fault and, in return, are prevented from suing employers over those injuries.

The tortilla factory’s owner was reached on the phone by a newspaper Friday but said he couldn’t talk and hung up. He had previously said that the death was the first worker injury at the company and said it had been caused by “human error.”

Unfortunately, business owners usually learn the hard way when it comes to a loss. This being a prime, and severe, example. Personally, I would be surprised if this business survives considering what surely lies ahead with lawsuits, etc.

–JK

January 25, 2011  

Workers Compensation Insurance – Independent Contractor vs. Employee

The difference between independent contractors and employees is a common debate within the insurance world. I wrote another post about it back in August, but the question continually arises, so it’s worth reinforcing. Determining which is which, employee vs. independent contractor is all fun and games until someone gets hurt. As an employer, think about the following points from the California State Compensation Insurance Fund before trying to dance around paying workers compensation insurance premiums.

Employees vs. Independent Contractors is a common debate for contractors and Work Comp insurance

California courts typically use a number of tests to determine whether an individual is an employee or an independent contractor. A crucial factor in determining employment status is the employer’s right to direct and control the work being performed. If you have the right to control the manner and means of the work performed, the courts have routinely decided that the “independent contractor” is actually your “employee”.

There are many other factors, but the reality is there is no definitive test to determine employee or an independent contractor. The following circumstances can help determine the relationship between the two. Among them, whether the person performing the service:

  • Has the right to terminate the relationship at will.
  • Is engaged in a distinct occupation or business.
  • Has voluntarily chosen the burdens and benefits of self-employment.
  • Has the skill required in the particular occupation.
  • Supplies the instrumentalities, tools, the work location, and carries the license or certificate required to perform the work.
  • Has the right to hire and terminate others.
  • Is paid by the time worked, or by piece rate.
  • Works under the direction of the employer or by a specialist without supervision.
  • Whether the services are a part of the regular business of the employer.
  • Whether the parties believe that they are creating the relationship of employer/employee or employer/independent contractor.

If there are questions, the Labor Code assumes a worker is an employee for workers’ compensation purposes. The burden of proof to support the independent contractor status of a worker falls on the employer. The Labor Code also requires that any subcontractor who does not have an active valid contractor’s license be treated as an employee, not an independent contractor. However, even though a worker may have a valid license, the worker may still be an employee depending on the factors as discussed above.

A good rule of thumb: as an employer, always protect yourself.

  • If certain jobs require a license, request a copy for your records.
  • Obtain original Certificates of Workers’ Compensation Insurance addressed to you from all contractors and subcontractors who have employees or who, in turn, subcontract any portion of their own work.

Remember, it’s all fun and games until someone gets hurt. If proper documentation is not maintained and presented to insurance auditors, carriers are obligated to charge premium for any liability that may exist under your workers’ compensation insurance policy.

–JK

November 23, 2010  

Employee Injuries & Return to Work Programs

When you think about workplace injuries and workers compensation insurance, what are the first thoughts that come to mind? Perhaps the cost for medical care and rehab? Compensation for lost wages? Legal services related to a claim?

Have you ever thought of the hidden costs associated with workplace injuries? Consider the following:

  • Lost productivity from an experienced employee
  • Equipment or product damage
  • Lost efficiency among employees
  • Time spent completing forms and communicating with medical providers and insurance adjusters

Hidden costs are those costs that are not immediately recognized, but take a toll on business profitability. These hidden costs are not typically covered under a workers compensation policy and drain from a business’s bottom line. This is why a Return to Work (RTW) Program should be implemented to help control costs.

What is a Return to Work Program?

A return to work program gets an injured employee back to work in a productive position when they are physically capable; not necessarily the position they had at the time of injury. There are studies show that the longer an injured employee is off work, the more difficult it becomes to get them back into the workplace. A return to work program keeps the employee engaged in a work based routine, interacting with fellow employees and contributing productively to the business.

For a Return To Work Program to be effective, communication must occur. Prompt notification of the injury to your insurance carrier allows the carrier to work with the injured employee and medical provider to assess the employee’s physical capabilities after the injury. From there, your carrier and provider can work with you to develop a plan to return the employee to work.

Benefits of Returning Employees To Work

Accepting an injured employee into the workplace can help your business:

  • Regain lost productivity.
  • Avoid temporary or new employee hiring and training costs.
  • Reduce or avoid litigation and discourage malingering.
  • Increase awareness of safe work practices.

How to Develop a Return To Work Program

  1. Identify the physical demands of jobs or tasks. Involve key employees to help with this task. Evaluation forms are available from the Safety and Health Department.
  2. Identify transitional jobs that an injured employee could perform. Full time work is not required. Injured employees may work fewer hours and at a lower wage and be eligible to receive compensation benefits. This reduces insurance costs which may affect your insurance rates for several years.
  3. Tell existing and new employees during orientation that your company has a RTW Program and at time of hire. Let employees know that if they are injured on job, the company will attempt to find modified work for them.
  4. Before an injury occurs, speak with your designated medical provider or doctor. Tell them that you have a RTW Program, and that you have jobs to accommodate an employee who has physical limitations.

A RTW program can help control workers’ compensation costs after an injury occurs; however, the best method to control these costs is to prevent injuries through an effective Injury and Illness Prevention (IIP) Program. Contact the Safety & Health Department for a model IIP program.

–JK

November 11, 2010  

Terrell Owens Nails Security Guard on MNF

Did anybody watch this touchdown catch by Terrell Owens on Monday Night Football? After the catch, a security guard on the sidelines gets nailed pretty good, and he looks like a pretty big guy too! Practicing insurance every day, my mind always thinks like an insurance agent. Call me sad, but the first thing that came to my mind watching this live was workers compensation insurance. If this guy was hurt on the hit, it would be a unique work comp claim. ‘Security guard hit by T.O. after a touchdown catch.’ Since he was on the job, it would definitely be a legitimate claim!

Take a look at this video.

-JK

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