Under the new experience rating formula instituted by the Workers’ Compensation Insurance Rating Bureau (WCIRB) as of January 1, 2010, all claims under $7001 now go into the modification on a dollar-for-dollar basis, which means that these claims now impact employers more heavily than they have in the past. Claims under $2001 have always gone into the formula at full value and when we talk about instituting a first aid program, we are focusing on these small claims. The medical costs for any claim that meets the legal criteria for ‘first aid’ can be paid by the employer, rather than by the insurance company. Section 5401 of the California Labor Code defines first aid as:
“any one-time treatment, and any follow up visit for the purpose of observation of minor scratches, cuts, burns and splinters, or other minor industrial injuries, which do not ordinarily require medical care. This one-time treatment, and follow-up for the purpose of observation, is considered first aid even though provided by a physician or registered professional personnel.”
The distinction between first aid and a “medical claim” that MUST be paid by the carrier is based on the type of treatment that an employee receives, not whether or not a physician was seen. It is generally accepted in California that the OSHA guides for recordable injuries can help define what claims can be considered “first aid.” This information can be found on the Cal/OSHA website at: http://www.dir.ca.gov/dosh/dosh1.html.
If a claim meets the definition of “first aid” and there is no prescription medication and no lost time or work restrictions beyond the date of the injury, the employer may pay the claim costs directly; however, it is still recommended that these claims be reported to the insurance company even if the employer pays the medical costs. When a physician is involved in treatment of a first aid claim, the California Department of Insurance, in conjunction with the Department of Industrial Relations and the Division of Workers’ Compensation reminds employers and physicians that they must comply with Labor Code Section 6409(a) which states that a physician who treats a first aid injury must complete and submit a Doctor’s First Report of Injury or Illness (Form 5021) with the insurance carrier within five (5) calendar days. With this requirement a claim will be reported by the physician or the employer via the Doctor’s First Report of Injury or Illness so it is good practice for employers to be proactive in reporting all claims to their carrier, especially since claims can escalate at a later date.
Many employers are concerned about the impact of frequency on their insurance rates if they report all of their claims, even first aid claims, but a good broker will present a strong case to the carrier at renewal that there were no costs to the carrier associated with those claims (because the employer has a good first aid program) and further that the employer is an even better underwriting risk because they report all losses to the carrier so there are no surprises down the road.
Remember that all claims under $2001 are grouped together and submitted to the WCIRB by the carrier at the unit statistical filing date. The claims go into the experience modification calculation on a dollar-for-dollar basis and are factored into the experience modification for the next three years. If there are no costs paid by the insurance company for some or all of these claims, an employer can dramatically reduce the modification points associated with these small losses. As one mod point can equate to one percent of premium, there is a strong incentive for employers to reduce their experience modification by paying first aid claims whenever legally permissible.
In an ideal situation, the carrier will review the claim to ensure that it meets the first aid criteria and can forward any bills to the employer for payment upon request. Unfortunately, many carriers do not have the time and resources to do this on a consistent basis so it becomes incumbent on employers to take a proactive approach to working with their medical clinic and carrier to implement a successful first aid program. Although it takes some time and coordination, the financial reward for implementing a First Aid Program is worth the effort. You can start by discussing the issue with your insurance carrier and your designated medical clinic. Your broker can also be a resource to facilitate communication, provide education and help to ensure the success of your first aid program.