Easing the Bosses’ Pain : Employers Moving to Rein in Runaway Workers’ Compensation Costs

Even as momentum builds in Sacramento for an overhaul of California’s much-criticized workers’ compensation system, employers increasingly are relying on themselves, rather than the legislators, for solutions.

To cut their workers’ compensation costs, employers are vigorously contesting injury claims that they consider to be bogus, stepping up workplace safety programs and jawboning doctors and insurance companies.

Such efforts, along with the weak job market, have contributed to a sharp downturn in claims since late last year, particularly in Southern California.

“The costs have gone so high that they’ve got to do something,” said Mary Johnson, vice president of Associated Claims Management, which handles claims for self-insured employers.

Injured workers say that employers often are mean-spirited in their cost-cutting, that legitimate medical and cash benefits are frequently denied. “What’s really happening now is everyone is being accused of fraud, no matter what the claim,” said a frustrated Richard I. Felton, a lawyer who represents workers.

Yet employers argue that a lax attitude toward fraud and abuse only breeds more bogus claims.

Lorber Industries, a family-owned textile manufacturer in Gardena, says it used to handle its workers’ compensation program through insurance companies that routinely settled suspicious cases without putting up a legal battle.

Although it might be cheaper in the short run to settle a claim than to litigate it, “the message that gets out to other workers is ‘Go ahead and do a compensation claim. At the minimum, you’ll get $1,000 to $3,000,’ ” said Andrea Lorber-Thompson, the firm’s human resources director.

Last year, to gain control over its workers’ compensation claims, Lorber dropped the coverage and switched to a self-insurance program. Now, among other steps, the company starts building legal defenses in case of questionable claims from the time a worker is hired.

New employees sign a form saying they will report immediately any job-related physical injury or psychological stress. Every three months, workers receive newsletters that make the same point.

When employees quit or are fired, they again are asked to sign documents indicating whether they have suffered any workplace injury. A worker who reports an injury is immediately sent to a company doctor.

(For the first 30 days after notice of an injury, employers can dictate which doctors may be seen under the workers’ compensation system--unless the employee has previously filed a request to see a personal physician.)

If a departing employee does not claim an injury, the company figures it has a solid defense against any claim that may come in--as some do--months or years later.

Part of Lorber’s more aggressive legal strategy is to make sure a company official sits in on depositions taken by lawyers. Lorber-Thompson conceded that a claimant’s attorney accused her of intimidation for doing this, but she said it is an effective way to head off exaggerated allegations.

“They might have a difficult time lying when I’m sitting right across the room,” she said.

Felton doesn’t object to such tactics, but says some employers and insurance companies commit abuses of their own in fighting claims.

He said some companies use doctors who consistently downplay workers’ injuries and authorize their return work before they are fully healed. In other cases, Felton said, management lawyers play hardball. They taking depositions “to punish people. They bring things up just to make people upset.”

Lorber, meanwhile, keeps up its guard against excessive costs, even when it accepts a compensation claim as legitimate. It has hired a utilization review firm to watch for overcharges on medical bills. “We make sure bills are itemized down to the last syringe,” Lorber-Thompson said.

To prevent injuries on the job, the company has hired outside consultants to teach employees how to use equipment safely and to upgrade supervisors’ managerial skills.

So far, the results have been dramatic: The company says its workers’ compensation costs have fallen--from $1.4 million a year in 1991 and 1992 to about $375,000 estimated for this year. Lorber’s injury rate has fallen, too, to eight a month from 10 a month a year ago, while employment has remained at about 450 workers.

Tips for Employers Some cost-cutting suggestions from workers’ compensation specialists: Enhance training. At times, even the most basic instruction--such as showing workers better ways to lift heavy objects--can cut injuries. More important, “if an employer exhibits genuine concern for the safety of employees, that philosophy tends to permeate down through the ranks,” said Randall B. Jones, a workers’ compensation specialist with the consulting firm A. Foster Higgins & Co. Provide an employee assistance program. Offer and encourage the use of programs to help employees deal with drinking, drug abuse and other personal problems. “It protects people from things that make them less attentive and more prone to work injury,” said Matthew Bartosiak, a human resources consultant with the Merchants and Manufacturers Assn. Offer financial incentives. Some firms provide bonuses or awards for employees who consistently follow safety procedures and work long stretches without serious injuries. Address ergonomic problems. Carpal tunnel and other cumulative trauma injuries, commonly suffered by computer operators and cashiers, have become a major occupational hazard--and a major source of workers’ compensation claims. Better designed workstations and such practices as requiring periodic breaks can make a difference. Keep in touch with injured employees. When workers are at home recovering, a supervisor should call periodically to make sure they are getting proper medical care and receiving benefit checks on time. Dealing with balky workers’ compensation insurers can be maddening for injured workers; costly litigation often begins with a frustrated worker. Bring employees back. Modify injured workers’ jobs or shift them into new positions so they can return to work quickly and draw a paycheck instead of depending on workers’ compensation benefits. Monitor your insurance company. Employers often complain that insurers drag their feet in settling claims because they have no financial incentive to act quickly; the longer an unsettled claim stays on the books, the longer the insurance company can charge higher premiums. So it may pay to keep pressure on the insurer to move cases along.

Tips for Workers Some advice to help workers get fair treatment when they are injured on the job: Immediately report all work-related injuries or illness to a supervisor. Some workers fail to notify employers for fear of being considered a nuisance--or worse, being fired. But in cases where retaliatory firings are not a genuine concern--and they should not be, because they are illegal--workers should report injuries promptly. Claims filed after you leave a company are likely to turn into a battle. Get needed medical care as soon as possible. If you have filed a personal physician designation form before the incident occurred, go to your personal doctor. If you have not, ask your employer to send you to a treating doctor. Keep thorough records. Hang onto everything associated with your claims, including medical forms, receipts, records of miles traveled for medical care and days missed at work. Show up for all depositions and medical appointments. Failure to appear can be used as justification for withholding benefits. Complain about late checks or poor medical care. Your employer might be unaware of the situation and could use its influence to resolve the problem. Consider hiring a lawyer. If you suffer a serious long-term injury--and if your employer or its insurance company is unresponsive--a lawyer who specializes in workers’ compensation cases may be able to help. Don’t exaggerate injury claims or otherwise abuse the system. Such actions might constitute workers’ compensation fraud, a felony.