When an employee is injured in a manufacturing mishap, the effects of the injury might not be resolved in just a few weeks or a handful of doctor visits. The incident might take a lifetime of treatment or cause a permanent disability. In those cases, manufacturers face long-tail Workers’ Compensation claims that require special management.
There are several considerations that drive up costs in long-tail Workers’ Comp claims beyond the direct medical treatment of the injury and payroll compensation while the employee is out. There is the cost of a replacement worker, his additional training and possibly enhanced supervision; potential delays on delivery of a product; and legal fees, since many long-tail claims involve negotiations, especially if there is a disability or settlement involved.
Managing long-tail manufacturing injury or illness claims is not for amateurs. It is crucial that those who oversee the employee’s use of benefits be knowledgeable about the typical protocol for the injury or illness. They must also understand the role of comorbidities (these are characteristics of the Workers’ Comp recipient that could make the injury or illness worse, such as obesity, smoking or preexisting conditions) and be alert to warning signs of malingering (failure to reenter the workforce even when better) or, worse, addiction.
Long-tail claims matter to manufacturers in a real financial way, since they add significantly to a company’s Workers’ Compensation “X-mod,” or experience modifier, which is a component in determining premiums for Workers’ Comp insurance. Imagine an incident that results in a severed limb. The costs may be phenomenal up front due to hospital bills, psychological counseling, rehab, incapacity to return to work, medications, and prosthetic devices. But consider the long-term effects. The employee may, when he can return to work, have to take a much lower-paying job than was available at the manufacturer. Additionally, there may be long-running retraining and occupational therapy in addition to the regular physical therapy the patient would receive early on. If the employee cannot return to work and needs continuous care, the costs could run into the thousands of dollars each week.
In severe-injury cases or when there is an industry-related illness or condition, such as asbestosis or cancer or even back problems or carpal tunnel syndrome, costs have to be estimated far into the future, and the insurer has to set aside money to cover payments—potentially for a lifetime. Those estimates of cost tally up against your company’s risk profile and can affect your insurability and your premiums, so it is of great importance that you play an active role in the claim.
Returning an Employee to Work
In situations where you can bring someone back on staff even while they receive continuing treatment for a long-tail Workers’ Compensation claim, you need a dedicated person on staff to assist with the ongoing coverage. This includes some oversight of prescription drug use, especially if narcotics or medical marijuana are involved. A person being treated with drugs for chronic pain will have a limited array of positions available at a manufacturer, so knowing the claimant’s drug protocol is crucial. There should also be some oversight of complementary treatments for comorbidities since conditions like diabetes could interfere with recovery. Even simple communications of benefits—both initial and ongoing—need to be clearly rendered to employees, because failures in this area can generate costly legal challenges.
Your company will have to decide how it wants to respond to each long-tail claim as they arise since each one has its own idiosyncrasies that merit different actions. Will you find a place for the worker to fit in at your company? Will you work with the insurer and the claimant’s lawyers to come to a financial settlement? Do you need to consult your insurer and/or an attorney due to a potential civil claim that your company committed a wrongdoing related to the injury or illness? And what if the worker who is injured is older? There are rules about what Medicare will and won’t pay and how the U.S. taxpayer gets reimbursed. Sorting out all those costs is your insurer’s job, but the costs will likely affect your X-mod.
Some manufacturers have in-house assistance for employees who are injured on the job. If you don’t, we can go over this with you. These types of programs might include retraining for alternative work; employee assistance programs that offer counseling, financial or other professional help; or wellness programs that help those with long-term injuries lead healthy lifestyles. Vision services, hearing checkups, other health screenings are all provisions that employers can offer that help recovering employees keep abreast of ancillary problems that might be developing unnoticed.
Long-tail insurance claims can be costly and can even harm a manufacturer’s reputation if handled poorly. But with proper management and obvious concern for the employee, a company can help make a miserable situation tolerable…and potentially give a quality of life the hurt worker didn’t initially imagine would be possible.
About Precision Manufacturing Insurance Services
Precision Manufacturing Insurance Services (PMIS), specialists in insuring manufacturers throughout California, can provide you with both the Workers’ Compensation coverage you require and the loss control strategies and claims management needed to help manage long-tail claims. We can also review your X-mod to see whether it accurately reflects your loss experience. Give us a call at 855.910.5788.