You may wonder how paying someone their regular wage to get one quarter
of their normal productivity will reduce costs. Or worse you might have a
fear of receiving no meaningful contribution to the company, while also
providing a soapbox for the injured employee to badmouth management. What if
adopting a return-to-work program leads to a whole new class of employees
who like the idea of working in a less arduous position while collecting
their full salary?
The insurers, brokers, and so-called experts in the industry don't want
to hear it, but you may have very real concerns about whether a
return-to-work program is right for your company and whether it will result
in a net savings. You deserve answers to your questions and concerns that go
beyond the typical, "Of course offering temporary alternate work saves
money; it's a best practice!"
It has to be said up-front that not every temporary alternate work offer
will save the employer money. For instance, the employee may reject the
offer because it does not fit with his/her physical capabilities. If a judge
agrees with the employee's position and orders ongoing weekly benefits, the
offer will not have had the desired effect of reducing the workers
compensation payments.
In another scenario, a job offer might be made and accepted after the
employee has been on workers compensation benefits for 2 years. If the
employee then sustains a new injury or an aggravation, the employer may be
stuck with an expensive original case and a second claim that might be even
more expensive. For an employer whose premium is adjusted by an experience
modification factor, two moderately expensive claims will have a
dramatically greater impact on their future premium than one very expensive
claim because the experience modification factor calculation is structured
such that it penalizes frequency more than severity.
Workers Compensation Savings
Just because there are scenarios where a job offer does not result in net
savings to the employer does not mean that a return-to-work program is not
beneficial in general. The program should be undertaken with the
understanding that it may not be effective in every circumstance, but that,
overall, it should pay dividends. It is also important to recognize that
only well-constructed and administered programs will succeed. Merely having
a policy or occasionally being open to making an offer is not enough. In the
scenario where the employee rejected the job offer and prevailed through
litigation, perhaps the offer truly did not match the employee's
capabilities. In that event, the offer was a waste of time.
To succeed, care needs to be taken to offer a real position that matches
the best medical information available. Whenever possible, this means
matching what the treating physician indicates for capabilities. If the
treating physician is uncooperative or totally unrealistic, an offer based
on an independent medical exam can be made, but this will not have the same
level of credibility since the independent doctor is typically considered
the "insurer's doctor."
Coordinated Loss Management Program
To be effective (and therefore achieve savings), a return-to-work program
should be part of a coordinated loss management program. The major
components of a loss management program are:
- Immediate Reporting and Investigation of Accidents
- Primary Medical Care Arrangement
- Return-to-Work Program
- Regular Communication with Injured Employees
The return-to-work program will not produce the desired results if the
injured employee does not treat with a provider that is willing to cooperate
in the return-to-work effort. To improve the chances of success, employers
should establish relationships with medical providers who will take the time
to understand their business and will work with the employer to facilitate a
medically appropriate return to work.
The best medical providers are
willing to tour the employer's operation and see the various jobs in action.
The most progressive employers will also draft functional job descriptions
to provide the doctor with detailed information about the physical
requirements of each position. The odds of achieving an early and cost
effective return to work go way up when there is a primary medical care
arrangement in place to go along with the return-to-work program.
Temporary Alternative Work
Offers to return to temporary alternate work have the biggest potential
for cost savings when they are made in time to prevent a medical-only claim
from becoming a lost time claim. This sort of offer requires timely medical
information. Receiving immediate medical reports can only happen if there is
close communication with the injured employee and cooperation from the
medical provider.
To stay on top of the medical situation, employers can make it required
procedure that their injured employees drop off medical reports after each
treatment. They can also make arrangements to have the doctor provide a
report directly to the employer after each visit. Returning an employee to
temporary alternate work after a week or two of disability can help take
some of the financial sting out of a case, but avoiding a lost time claim
entirely by providing an immediate accommodation will dramatically help an
employer's loss experience.
Time is money in the workers compensation system, so it is very costly to
be waiting for medical information. Additionally, the experience
modification factor calculation is weighted so that the first $5,000 of
every case counts the most. Any bottleneck that causes a delay can lead to a
lost time claim which will exceed this $5,000 value. Employers that take
their return-to-work program to the level where they routinely avoid lost
time claims by providing modified work will most assuredly have reduced
workers compensation costs.
Bottom-Line Savings
The fact that successful return-to-work programs can reduce workers
compensation costs does not necessarily mean that the program is good for
the bottom line. There remains the issue about whether paying an employee
full wages for a reduced contribution to the company ultimately pays a
dividend. In the best-case scenario, the return-to-work program is embraced
by the employee as a means of remaining a part of the work environment while
also receiving the treatment necessary to recover to the point where they
can resume their full duties. The employer may have a period of reduced
productivity, but this should be counterbalanced by successfully avoiding
the need to search for, hire, and train a replacement.
A well-written policy will also indicate that the modified duty position
will be reviewed on a weekly basis so the employer has the flexibility to
withdraw the offer if it is not working out. An employee with a bad attitude
who is adversely affecting the workforce could therefore have his or her job
offer revoked as part of a weekly review. However, every effort should be
made to manage through this sort of scenario since revoking the offer and
placing the employee back on benefits can be costly and is likely to be what
the employee was looking for. In any event, the accommodation should not
typically last more than 30-90 days.
The intent is not to create another class of employee by putting large
numbers of employees to work in modified positions. The intent is to
maintain the work connection and work routine for a limited period of time
and then have the employee resume full duty work.
The Experience Modification Factor
An employer that refuses to offer temporary alternate work because of
concern about the lack of productivity from the injured worker needs to
understand that without the job offer, the employee will likely continue to
receive close to their full salary on workers compensation benefits while
contributing absolutely nothing to the company. Additionally, the employer
may have to pay a replacement employee's salary while the injured employee
is being paid to stay home. The employer will essentially be paying two
employees for the contribution of one. The employer's double payment will be
felt when there are future premium increases as a result of the workers
compensation benefit payments. The impact of the injured employee's claim on
the experience modification factor will likely be significant and will
continue for the 3 years of the experience period.
When evaluating whether a return-to-work program saves money on the
bottom line, the 3-year experience modification factor impact must be
contemplated along with the cost of searching for, hiring, and training a
replacement. If the increased experience modification factor causes the
premium to rise by $20,000, and this increase will last for 3 years; the
employer has incurred a $60,000 cost in order to avoid perhaps a 60-day
period of less than full productivity.
Side Benefits
The biggest opportunity for cost savings from a return-to-work program
comes from the early return of employees to work and the avoidance of
litigation. However, there is a significant side benefit for employers that
offer temporary alternate work. If the employee declines a job offer and the
claim heads to litigation, the employer is in a strong position to argue
that the employee should not receive workers compensation benefits because
they have chosen to reject a reasonable offer to return to work. Without a
job offer, the odds of having a judge remove an employee from workers
compensation benefits are close to nil.
A job offer increases the probability of litigation success and also
creates leverage if the case is destined to be resolved through settlement.
Particularly if an employer gains the reputation for routinely making good
faith job offers, their results when forced to litigate, should be markedly
better than an employer that refuses to embrace temporary alternate work.
Conclusion
It turns out there is a good reason that return-to-work programs are
considered a best practice: they generally do save employers money and help
them maintain a stable workforce. There are bound to be individual claims
where a job offer does not result in savings, but that is not a good reason
to avoid implementing a program. Particularly when they are part of a more
global loss management regime, return-to-work programs make all the sense
(cents?) in the world.
*The
Albert Risk
Management Consultants claims management team (Glenn Brown, Lisa
Hartman, William Quinn, Jr., and David A. Tweedy) contributes articles on
claims topics. You can reach Glenn Brown at