Many firms, including manufacturing shops throughout California, don’t realize the critical importance of a First Report of Injury and the negative impact that lag times in reporting worker injuries can have on Workers’ Compensation claims. A delay in reporting may impact the medical treatment to an employee, possibly aggravating the injury, extending the pain or discomfort, and delaying a return to work. The delay also can affect the overall cost of medical treatment and the Workers’ Comp claim. Just take a look at the statistics:
- 2-week reporting lag time: Claims 18% higher than those reported the same day as the injury
- 3-week reporting lag time: Claims 29% higher than those reported the same day as the injury
- 5-week reporting lag time: Claims 45% higher than those reported the same day as the injury
In translating these percentages into bottom-line costs, a two-week reporting lag time, for example, increases Workers’ Comp indemnity costs by an average of $76,700, while a five-week delay results in a $94,250 increase in the indemnity portion of the claim.
Furthermore, claims closed in 30 days carry an average cost of $287 with 90% of claims closed within this time period involving medical expenses only. In contrast, sixty-three percent (63%) of claims open between six months and a year involve indemnity as well as medical payments. This number grows to 90% for claims open more than three years.
As you can see, it’s clear that injuries must be reported immediately – within 24-48 hours of the accident or injury complaint – to improve the outcome of the claim. This not only helps to foster a positive relationship between the supervisor and employee, as immediate attention conveys that the employer is committed to the welfare and health of each worker, but it also keeps claims costs down and can serve to prevent fraudulent claims from occurring. In fact, it’s been shown that the first 48 hours after an injury is reported are the employer’s best opportunity to gather evidence that will help defend the claim and avoid paying benefits that are not truly owed.
The 90-Day Rule
Supervisors in your manufacturing shop must also be aware of the 90-day window rule applied to California Workers’ Compensation claims. There is a 90-day period after the time an employer becomes aware of an incident wherein an employee may have been injured that the carrier has the right to investigate and decide whether to accept or deny the claim. During this 90-day “investigative” period, the carrier may take statements from the injured worker, witnesses to the event, fellow employees that may have additional historical information, review the employee files, consult with the treating physician, and/or send the claimant for an Independent Medical Exam (“IME”).
Therefore, it’s imperative that when an injury is reported to a supervisor, or if a supervisor sees an incident occur that could cause an injury, that the employer portion of Form DWC1 is completed by the employer and given to the employee. This accomplishes two very important things:
- Fulfills the Employer’s duties under California Workers’ Compensation law
- Stops the 90-day time clock from counting down on the insurance carrier’s right to investigate the claim. The 90-day clock will only begin again if/when the employee returns the form with the employee section completed and signed.
There are two sections on the form. Be sure the supervisor completes the employer portion of the form and provides it to the employee to fill out his or her section. In providing the form you are certainly not encouraging your employee to file a claim, but rather documenting that an incident either occurred or was reported to you, with the onus now on the employee to proceed with filing a claim. You will also be in a better position down the road should the employee decide to file a claim, let’s say, six months after the purported injury, particularly when there is a questionable, even possible fraudulent claim. Without the DWC1 Form completed within the 90-day window, you will be responsible for the claim.
Precision Manufacturing Insurance Services (PMIS) specializes in insuring manufacturers, including providing Workers’ Compensation coverage to shops across Southern California. As part of our commitment to the industry, we also assist manufacturing firms in educating them on how to contain comp costs, and mitigate long-term claims that can be costly and significantly impact your operation’s bottom line. For more information about how we can help you with your manufacturing Workers’ Compensation insurance, please contact us at 855.910.5788.