OK safety pros, here’s a one-question quiz: What’s the best way to keep workers’ comp costs down?
Answer: Prevent worker injuries and illnesses in the first place (of course).
But is that how chief executives at your company would answer that question?
Maybe their answer would be: Control medical costs or challenge frivolous claims.
Could that point of view cause owners/CEOs/CFOs to think they don’t have to spend money on injury prevention in the first place?
That’s one of the points behind a new U.S. Department of Labor report, Does the workers’ compensation system fulfill its obligations to injured workers?
DOL’s answer to that self-imposed question is, increasingly, no.
“Working people are at great risk of falling into poverty as a result of workplace injuries and the failure of state workers’ compensation systems to provide them with adequate benefits,” the report states.
The report says costs are being shifted away from employers and onto workers, Medicare and Social Security Disability Insurance.
“As the costs of work injury and illness are shifted, high hazard employers have fewer incentives to eliminate workplace hazards and actually prevent injuries and illnesses from occurring,” according to the DOL.
Among the changes to state workers’ comp laws that impact this, according to the report:
- limits on number of weeks for temporary total disability benefits
- laws (California has one) where amount of impairment between work and non-work-related causes must be apportioned
- requirements to qualify for permanent total disability benefits have become more stringent (some states have a maximum timeframe for permanent benefits)
- more post-injury drug testing, mandated in some states, encouraged in others via lower premiums when an employer requires it
- fee schedules for medical costs
- employer gets to make physician choices
- caps on duration of medical coverage, limits on number of visits
- “liberal interpretation” changed to workers must prove cases by “preponderance of evidence “ or “clear and convincing evidence” (greater incentive for employers to challenge cases), and
- 43 states allow settlements, which workers are often pressured, even by their own lawyers, to take.
Trend 30 years in the making
The report pinpoints the mid-1980s as a turning point in state workers’ comp programs. This is when a shift toward controlling costs by cutting benefits started. This was a reaction to the increase in medical costs “at alarming rates since 1980.” Some states have had provisions for settlements in cases since 1990.
The ultimate result was Oklahoma’s attempt at allowing employers to opt out of the workers’ comp system via a form of self-insurance. The law, passed in 2013, was overturned this year by the Oklahoma Supreme Court which said the opt-out provisions of the law were unconstitutional.
The DOL report concludes that “the race to the bottom continues.” In other words, states are now competing with each other by enacting various laws which seek to keep workers’ comp insurance costs down – as low or lower than in other states.
And this is the ultimate result, according to the report:
“The combination of unfiled legitimate claims, benefit caps, barriers to accessing medical care, and potentially inadequate settlements of permanent disability claims together mean that the direct costs of worker morbidity and death are transferred away from employers, decreasing any direct economic incentive to invest in safety.”
Here’s a potential link the report doesn’t make: After years of decreasing worker fatalities at U.S. companies, that rate has plateaued in recent years. Could that be because of decreasing spending on safety?
How do you fix this? Among the report’s recommendations: Strengthen the link between workers’ compensation and injury/illness prevention. Two ways to do that:
- Improve both the targeting of state and federal enforcement and compliance assistance resources, and the loss control efforts of insurance carriers, and
- Encourage the efforts of workers’ compensation insurance carriers to assist client employers to prevent injuries and illnesses through implementation of comprehensive safety and health management programs.
So, safety pros, you have your work cut out for you at some companies. Despite the basic human reason (you don’t want to injure or kill your employees) for solid workplace safety programs, you have to show the C-suite that investment in safety produces a strong return on investment (ROI).
How does your C-suite view safety? Are you finding it more difficult to justify the cost of safety at your company? Let us know in the comments.