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Business Protection Bulletin


By February 1, 2008No Comments

Attributing a company’s Workers Compensation costs to an individual department encourages managers and group supervisors to pay increased attention to safety and training programs, and to monitor closely the return to work of injured employees. In some companies, as a further incentive to cut Workers Compensation costs, reimbursements from claims are deducted from departmental budgets, rather than a general fund.

By initiating simple internal processes that place responsibility for Workers Compensation expenses on individual departments, employers can take greater control of implementing preventive measures and injury management procedures, thus decreasing the frequency and severity of injuries. As a result of implementing these procedures, a company could reap substantial savings in reduced claims and Workers Compensation premiums.

Employers can meet safety goals by communicating directly with those employees who are potential Workers Compensation beneficiaries. First, a simple analysis should be performed to identify high-risk groups based on a history of injuries and claims. Bringing together employees on a departmental level to discuss the injury management process will improve communication between all parties in the working environment. Having those employees at risk discuss how a job can be performed more safely will reduce injuries. Or conversely, having employees explain how injuries can occur because of faulty equipment or incomplete work procedures will also assist the employer in modifying its safety procedures and work environment.

Too often, workplace injuries are not reported promptly. Supervisors often fail to acknowledge accidents hoping they will disappear without resulting in medical or lost-time expenses. Evidence shows that this practice can result in increased expenses because the initial injury was not reported and treated immediately.

A study of more than 53,000 permanent partial disability and temporary total disability claims indicated the following when compared with claims reported within a week of occurrence:

  • 1-2 weeks after occurrence – 18% more expensive
  • 3-4 weeks after occurrence – 30% more expensive
  • More than a month after occurrence – 45% more expensive

Sharing these sobering facts with managers and supervisors should result in timely reporting of injuries, thus reducing their department’s Workers Compensation costs, and the company’s.

When stressing safety on the job during training programs and reviewing work patterns periodically, the company will help reduce injuries within each department. Once an employee is injured, the goal of the employer and employee should be returning that employee to work as quickly as possible. Both parties should share a common desire for the most effective care, a timely recovery and a quick, safe return to the workplace.

With each department being responsible for its own Workers Compensation costs, departmental managers can be more involved in helping injured employees return to work. Rather than having the injured employee contacted by a third party — usually a claims adjuster or an attorney in some cases, which can develop into an adversarial stance — the employer’s concern and response is conveyed directly to the out-of-work employee.

Although there are a few workers who purposely defraud the system, they are very much the exception rather than the rule. Analyzing Workers Compensation costs on a departmental level makes it more difficult for malingerers to file fraudulent claims.

Although eliminating all injuries or claims is not possible, accidents do happen. It is feasible, however, that the severity and frequency of injuries can be reduced significantly by placing responsibility for maintaining a safe working environment at the departmental level and, in the long run, rewarding the department for reducing claims.