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10 Tools to Cut Workers’ Comp Costs

1. Implement a fraud-abatement program

Employee education helps defer fraud, so creating a fraud abatement campaign that fits for your industry and includes education of employees can have a significant impact on the number of questionable claims filed. Communicate regularly with your employees about workers’ compensation and eliminate misconceptions by explaining what it is and how it works. Consider using social networks, flyers, posters, employee newsletters and guest speakers to spotlight workers’ compensation fraud as a serious crime. The guest speaker can be a representative from your insurance carrier’s special investigation unit (SIU), a local law enforcement representative who is focused on workers’ comp fraud (such as a Department of Insurance fraud investigator or deputy district attorney handling prosecutions in the fraud unit) or a representative of your contracted SIU partner. Provide employees a mechanism to report fraud anonymously, such as a fraud hotline or email system, so they can easily report suspicions. Encourage employees to share information.  Insurance fraud is a felony in most states, and employers should demonstrate zero tolerance, with timely investigation of claims and reporting of suspicious claims to law enforcement.

2. Use sound hiring practices

The best defense is a strong offense. Conduct thorough pre-employment background checks to eliminate candidates who are unable to perform the job or not a good fit. If you have questions about anything you find in a background investigation, ask the applicant to explain.  It is a good idea to hire an investigative agency to assist, especially if you do business in multiple states, to ensure the investigations abide by all local, state and federal laws and regulations. Consider pre-employment drug testing; drug users can be unsafe workers and are more likely to file false claims to obtain money for drugs.

3. Pave the way for return to work

Communicate to employees that every attempt will be made to get injured employees healthy again and returned to work. Prepare a comprehensive, written, return-to-work plan, with detailed job descriptions that include temporary or alternative duties, and communicate that plan to appropriate persons. The functional job description is one of the best tools for identifying the discrete and unique duties, responsibilities and accountabilities associated with varying positions. The functional job description is a part of a continuing process throughout the entire employment relationship and should track and reflect changes in organization structure, tasks, accountabilities, skills and requirements. The functional job description should document the minimum job requirements and preferred qualifications of each position (including education, experience, licenses, certificates, physical requirements and work day/hours). This description can be used in conjunction with hiring practices to ensure the applicant has the ability to perform the job. Functional descriptions are also important for medical providers to use in determining return to work following an injury, including whether the employee can return to work full duty or in a modified capacity.

4. Surveillance video equipment

Monitoring is a proven spoiler of workplace crimes.  Consider both covert and overt monitoring, depending on the job site, type of claims filed and privacy concerns. If an injury is alleged, quickly secure the video and forward to your investigative partner to secure the evidence, log chain of custody and provide copies as needed. If the video does not match the employee’s description of the injury, create a strategy to share copies of the video with medical providers to ensure that only warranted benefits are obtained. Communicate with your claim professional, defense attorney and investigative partner to determine the best plan of action. For example, additional investigation may be warranted before putting the video into evidence, such as surveillance to document the employee’s current physical abilities or a recorded statement or deposition by the injured worker to memorialize his account of the injury. Your team will create a strategy to appropriately leverage the video in handling the claim and potential fraud.

5. Have a plan for when an industrial injury occurs

Provide training to leadership on how to respond when an industrial injury occurs. Respond immediately to any reported injury or rumor of potential injury. Promptly recommend your predetermined medical provider to the injured employee. A detailed description of the accident and injury should be obtained, and any relevant workplace evidence should be preserved. Have a professional investigation conducted as soon as possible. A timely investigation can help ensure the injured worker receives the appropriate benefits at the appropriate time. A thorough investigation can include statements by the injured worker, witness statements, scene inspection, photographic evidence, the securing of workplace equipment or other evidence. An investigation can also include a search of public records, criminal and civil court records, Department of Motor Vehicle records, a prior claims search, the securing of copies of records such as police report, 9-1-1 call record, OSHA report or other, as applicable. The investigation can identify potential subrogation so that the claim professional and defense attorney can pursue potential third-party liability. The investigation will also highlight suspicions; consequently, having a professional, third-party investigative agency conduct the initial compensability investigation is a critical tool in preventing fraud.

6. Familiarize yourself with investigative tools

Investigation of claims provides many benefits on workers’ comp costs and is especially critical for claims that have “red flags,” to ensure that only warranted benefits are administered and that potential abuse or fraud is identified early. Technological advances have provided new investigative tools as well as enhanced the capabilities of “old-school” investigative solutions. Background investigations, Internet searches, social-network monitoring and database searches are cost-effective investigations that can be conducted quickly and provide a plethora of valuable information. Information found on social networking often includes current activities, past behavior, hobbies, interests, sports, clubs, association, vacations and more. This evidence can include both photographic evidence and written information. If the injured worker is not improving despite medical treatment, consider having surveillance conducted to determine the level of physical abilities, limitations and restrictions. Surveillance evidence provides the best impact. The investigative agency should conduct a pre-surveillance investigation that includes searching social networking sites, databases, public records and DMV records. While currently the use of drones is not legal in most states, this is technology that may be incorporated into the investigative toolbox in the near future. Field investigations are important to determine compensability of a claim, so obtain recorded statements from the injured worker and any potential witnesses. Remember that “witnesses” are not only people who may have seen the injury occur, but people who may have information about the injured worker’s prior injuries, prior claims, hobbies, other employment, activities, etc. This may include co-workers who work near the injured worker, eat lunch together, share a carpool or take breaks together. Question potential witnesses if they personally obtained photographs or video of the subject incident or scene, as this is often the case given the widespread use of smartphones. Medical facility searches and pharmaceutical searches locate prior medical records and pharmaceutical history, which can help determine compensability and apportionment, identify potential drug abuse and ensure that only warranted benefits are paid.

7. Implement a safety program

Make workplace safety a priority; a safe workplace makes fake or exaggerated injuries harder to legitimize. Hold regular safety meetings and remind employees about workplace safety through social media, posters, flyers or employee newsletters. Consider a program that rewards workers for meeting safety milestones. Encourage employees to identify potential safety issues and share their ideas. To reduce repetitive injury claims, provide onsite ergonomics solutions to ensure employees are performing their duties the correct way. Encourage prompt reporting of injuries to immediately identify and resolve any problem that may contribute to workplace injuries.

8. Create an Experienced and Specialized Team

Build a strong and dedicated team to manage your workers’ compensation claims. Your team should include experienced claim management professionals, specialized legal resources, risk managers, a licensed investigative agency specialized in workers’ compensation and an SIU with certified fraud specialists (either internal with your insurance carrier or contracted directly). Communicate with your claim professional and ensure that he is actively identifying red flags and investigating your claims in a timely fashion. Partner with a licensed investigative agency that is experienced in your industry. If insured with a carrier, communicate with the carrier’s SIU to ensure that your claims are being reviewed by fraud specialists. If you are self-insured or in a high-deductible program, partner with an investigative company that has a successful SIU. Communicate with your team regularly to ensure active handling of claims, identify suspicious claims early and build effective strategies to leverage investigative evidence to stop unwarranted benefits and fight fraud.

9. Listen

Listening to employees can provide valuable information. The injured worker may have provided key information before and after the injury. Was the employee complaining before the alleged injury about work, physical pain or personal problems? Was he disgruntled, turned down for a promotion or had a change in job duties, supervisor or responsibilities? Did the injured worker talk about family problems such as health issues, additional family responsibilities or other personal situations? This information may be relevant and should be shared with the claim team. Listen after a workplace injury and throughout the claims process, as rumors of misrepresentations or foul play may filter through the workplace. Keeping an ear to the grapevine may help in weighing a claim’s validity. Have an “open-door” policy and encourage employees to share information and report suspicions.

10. Be Familiar With the Red Flags of Workers’ Comp Fraud

  • Injury reported late or on a Monday or following time off
  • Exaggerated details about incident or symptoms
  • Co-worker skepticism or different versions of the incident
  • Disgruntled, soon-to-retire, soon-to-strike, facing layoff or involved in seasonal work that is about to end
  • Unexplained or excessive time off prior to claimed injury
  • Has a history of short-term employment
  • New on the job, and injury is unwitnessed or suspicious
  • Experiencing financial difficulties or domestic problems before filing the claim
  • Recently purchased a private disability policy
  • Submitted employment application with misrepresentation(s)
  • First notification of injury or claim made after employee is terminated or laid off
  • Reported immediately after days off or alleged injury around date of a denied vacation request
  • History of substance abuse, prior injuries or prior accidents, especially soft-tissue injuries
  • Is known to participate in high-risk activity such as snowboarding, drag racing or boxing
  • Suspicion or tip of unreported work, cash work, seeking other employment or self-employed
  • Failed to report the injury in a timely manner or “forgot” to report critical details
  • History of reporting injuries, especially soft-tissue injuries
  • Other family members also receiving workers’ comp benefits or other “social insurance” benefits
  • Is unusually familiar with workers’ comp claim handling procedures and laws
  • Is consistently uncooperative, refuses to sign documents or submits documents with cross-outs
  • Information that employee is active or may be exaggerating limitations
  • In-house surveillance, tip or information indicating the injury may be non-industrial or not legitimate
  • Refuses to provide a statement or sign a medical release
  • Moves out of state or country shortly after filing claim
  • Protests about returning to work or changes provider once released to work
  • Details of accident are vague or contradictory, have inconsistencies or are not credible
  • Reported injury has same factors of other claims reported by co-workers, especially in the same time period
  • Denial or failure to report prior injury or medical treatment
  • Suspected altering of checks, off-work slips, prescriptions, or suspicious mileage reimbursement
  • Dramatizes physical condition or draws attention to collar, brace or other supportive devices
  • Is observed moving normally or without medical devices (collar, brace, cane, etc.)

What Is the Future for Drones?

In 2013, Amazon CEO Jeff Bezos announced to the world that the online retailer would begin to develop a “drone-to-door” delivery service for its loyal customers. Dubbed Amazon Prime Air, the system would deliver packages directly to your doorstep in just 30 minutes after an order is placed, setting a new and higher bar for “fast delivery.”

However, after a variety of issues and concerns were addressed by increasing regulations added by the Federal Aviation Administration (FAA), it  appeared that Bezos’ announcement would never get off the ground. But after two years of waiting for the FAA, Amazon will finally get to test these drones on U.S. soil — or, should I say U.S. air? — bringing customers one step closer to having their Tide detergent refilled by a delivery drone.

Despite the U.S. government dragging behind on approvals, for retail and civilian use, sales for drones aren’t expected to slow any time soon. Companies like Teal Group, an aerospace research firm, estimates that sales of both military and civilian drones will total more than $89 billion by 2023.

Other big companies, such as State Farm and AIG, are also getting into the drone business. In fact, State Farm is the first insurance company in the U.S. to receive regulatory approval to test drones for commercial use. With drones popping up in so many different industries, it makes me wonder, what impact will drones have on companies’ customer experience — good and bad?

The Good

State Farm plans on changing the insurance industry for the better, using drones to aid in natural disaster relief. For instance, instead of State Farm spending the money (and time) to ship hundreds of claims adjusters out to natural disaster sites to assess damages, the company will send only a handful of agents equipped with a drone partner to more efficiently survey damaged property.

Jason Wolf, a property defense attorney and shareholder at the Florida-based firm, Koch Parafinczuck & Wolf, stated in an interview to ClaimsJournal.com: “I envision a time when, after a catastrophe, an adjuster pulls up to a neighborhood and opens the trunk of his car and presses a few buttons on his tablet device, and the drone does an immediate survey of everything and streams it all right to his tablet device, and he knows exactly where to go first and what’s most significant within minutes. Costing very little money, the insurance company has a sense of everything that needs to be done in a very short amount of time.”

Imagine all the headaches this could mitigate for customers and employees after the chaos caused by unfortunate losses created by natural disasters.

It’s interesting, too, how this type of surveying will require additional training, but training we might be familiar with. Much like a police officer who trains alongside his dog in a K-9 unit, insurance adjusters will train alongside their partner – only, in this industry, it would be a drone.

While there is debate in the insurance world about how drones will operate, one thing is for sure – they will be operated and used to speed up services and save on cost, making customers’ lives a little easier. As such, claims assessment aided by a drone will yield quick turnarounds and an even quicker payout to the insured.

Additionally, insurance companies will start offering drone insurance to owners of unmanned aircraft systems (UAS). RiskandInsurance.com noted that the general types of coverage that will be required for the use of UAS and ancillary business activities will include liability, personal injury, invasion of privacy, property and workers’ compensation. The publication also mentioned that, given the conservative nature of the insurance industry, carriers could place stricter guidelines on drone coverage than the FAA does.

Once regulated and insured, drones will be sent out into the community to collect data. For example, what if someone’s home flooded? Well, insurance companies could send their drone to the flooded house and survey the area for all damages, speeding up the process for families affected.

There is also the use of drones for the collection of data by third parties. Imagine that Ford is looking to target advertisements for a new truck to areas where the road conditions would demand the use of four-wheel drive. Ford hires an agency to send out drones to specific cities where it is looking to advertise.

This drone will collect data on road conditions and take images of cars on the road to make sure a majority of drivers are in trucks, and will then report back on economic conditions. Ford doesn’t want to be advertising where citizens can’t or won’t pay for the product.

In a world becoming more drone-centric, these types of background checks and data collections via UAS will become increasingly more frequent.

The Bad

The government review process for a drone is 120 days, but, by the end of the process, Amazon says the technology of the drone submitted for regulation is outdated. Therefore, Amazon must update its filing and submit to the FAA for regulation, starting the 120-day review process all over again.

The other concern of the FAA is air traffic. Coming down with a few regulations on drone flight, the FAA is requiring that drone controllers have sight of the drone at all times and that they must operate under 400 feet.

Exelis, a global aerospace, defense, information and services company, was featured in an article on Engadget recently, discussing its development of an air traffic control system for drones. Nearly ready for testing at the FAA approved drone-testing sites, the low-altitude monitoring system would keep tabs on compact aircrafts flying at or under the mandated 400 feet.

It’ll be interesting to see how industry giants, such as Amazon, overcome these obstacles to create a non-invasive customer experience with drone technology.

Once regulated, the next issue is invasion of civilian privacy. Private and civil liberties advocates have raised doubts about the legitimacy of facial recognition cameras, thermal imaging cameras, open Wi-Fi sniffers, license plate scanners and other sensors commonly used by drones in the civilian sphere.

Civilian uses of drones for hobby are already causing issues, most notably at the White House, but across the country, as well. The LA Times reported last June that while LA Kings hockey fans were celebrating their Stanley Cup victory, a group noticed a drone flying over their heads filming the scene. Angry at the invasion of privacy, the crowd knocked the drone out of the sky using a T-shirt and then smashed it to bits with a skateboard.

In Los Angeles, flying a drone in public is not illegal, but LAPD Cmdr. Andrew Smith commented that, “It was kind of an eye-opener for us, that this something we really need to pay attention to.” While the Kings fans reactions may seem a little over the top, the general population seems to feel the same way when they see a drone overhead.

With no official laws on the books regarding the use of domestic drones, the right to privacy becomes a large topic of concern for many citizens. The American Civil Liberties Union states on its website, “Congress has ordered the Federal Aviation Administration to change airspace rules to make it much easier for police nationwide to use domestic drones, but the law does not include badly needed privacy protections.”

It will be interesting to see how industries promote drone use to their customers, without raising fears about a threat to privacy. After all, customers may not always be right, but they are always the customers.

Drones will also need to be protected from cyber attacks.

“Cyberattacks on your PC – they can steal information, and they can steal money, but they don’t cause physical damage, whereas cyber-attacks in a UAV or a car can cause physical damage, and we really don’t want to open that can of worms,” said Kathleen Fisher, the previous program manager of the DARPA project in a statement to NextGov.com

The Pentagon is currently working on developing code that will protect a Boeing Little Bird unmanned aircraft from being hacked. Defense industry programmers are rewriting software to safeguard the computer onboard the helicopter drone and aim to have the project completed by 2017.

The Future

It’s exciting to think about what drone technology will bring to companies and their customers – and to people everywhere. Let’s face it, if we think we have seen the complete potential of what customer experience has to offer, then, well, we’re being naive. The new drone technology will reinvent customer experience once again. And the best part? We all get to see how it unfolds.

The future seems endless for drones. Whether you feel they are an invasion of privacy, or they will begin to make our lives easier and aid society in ways that haven’t even been thought of yet, drones aren’t going anywhere any time soon. If you need to put it in perspective, a white paper featured on Cognizant.com notes that 40,000 drones are expected to deploy in 2015, and this is a number that will continue to increase each year. This industry is ready for take-off.

drone 2

If you haven’t come face-to-face with a drone yet, don’t worry, you will.