Controling Your Workers Compensation Modification Factor

© 2010 Zywave, Inc. All rights reserved.

Injury Prevention.

Loss Control.

MOD Reduction.

GDI is your partner in

managing your workers’ comp

premium

Our agency can deliver the strategies, tools and resources

that will help you understand and manage the factors that

impact your experience modification factor (MOD),

allowing you make a serious impact on your workers’

compensation premium.

Stay Virtually Connected

We deliver documents on command and have OSHA recordkeeping

capabilities. These tools allow you to access and share valuable resources, including employee newsletters, industry

resources and connecting to peers in your industry

Our Tools for Success

Take advantage of our vast library

of resources, which can assist you

in understanding and controlling

your MOD through a

comprehensive risk management

program.

Risk Management

Control your MOD through a

comprehensive risk management

plan, which reduces your workers’

compensation premium by acting

on all its contributing factors, from

loss control to cost containment.

We have the tools to help you

every step of the way.

Loss Control

Our agency can help you stay on

top of your workers’ compensation

claims by building solid loss

control and safety programs to

reduce the total number of

injuries in the workplace.

Safety Programs and Policies

We know your industry has unique

risks – we have the industry-

specific programs and policies that

outline how to control those safety

risks to keep your employees

injury-free on the job.

Return to Work

When employees are injured, an

effective return to work program

can reduce workers’ compensation

costs and ultimately contain your

MOD. Stay on top of your costs

with our extensive collection of

materials to help you create a

successful return to work

program.

Fight Fraud

Workers’ compensation fraud is

commonplace. We can instruct

you on how to prevent and detect it in your workplace.

GDI Insurance Agency, Inc.

801 Geer Road Turlock, CA 95380 ■ Phone: 209-634-2929 Online: http://www.gdiinsurance.com/

Table of Contents

POLICIES, PROGRAMS AND MANUALS ........................................................................................... 3-10

Return to Work Program Guide ............................................................................................................. 3-6

Return to Work Policy .......................................................................................................................... 7-10

FORMS ....................................................................................................................................... 11-12

Return to Work Evaluation Form ....................................................................................................... 11-12

EMPLOYER RESOURCES ............................................................................................................... 13-21

Risk Insights: Five Steps to Reducing WC Costs ................................................................................. 13-14

Coverage Insights: Understanding Your WC Experience Modification Factor ................................... 15-16

15 Warning Signs of Workers’ Compensation Fraud .............................................................................. 17

Drug Testing Proves Positive Results in Decreasing WC Mods .......................................................... 18-20

Top 10 Ways to Control Your MOD ......................................................................................................... 21

PRESENTATIONS ......................................................................................................................... 22-29

Your Experience Modification Factor ................................................................................................. 22-23

Preventing Workplace Accidents: A How-To Approach ..................................................................... 24-25

Impact of Return to Work Programs .................................................................................................. 26-27

Financial Impact of Work-Related Injuries ......................................................................................... 28-29

CHECKLISTS ................................................................................................................................. 30-31

Plant Safety Inspection Checklist ...................................................................................................... 30-31

3

G DI I NS URA NC E AGE NCY , I NC.

RETURN TO WORK PROGRAM

A Comprehensive Guide to Developing an Effective Plan

Provided by: GDI Insurance Agency, Inc. ◊ 801 Geer Road Turlock, CA 95380 Tel: 209-634-2929

4 | R E T U R N T O W O R K P R O G R A M G U I D E

WHERE TO BEGIN

The following guide will help you construct an effective Return to Work Program and create meaningful work assignments for workers injured both on and off the job. It includes

background statistics to support the program, steps to take before execution, how to manage the program and implementation recommendations.

Step 1: Know the Facts

Supporting your Return to Work Program with evidence that it will help save GDI Insurance Agency,

Inc. money is the best way to convince upper management to get on board. Obviously, injured

employees drive up company costs in the form of lost work days and compensation costs. Studies

clearly demonstrate that employees who are off work because of injury for more than 16 weeks

seldom return to the workforce, and companies get stuck paying hundreds of thousands of dollars each

year in unnecessary costs.

Step 2: Gather Data

Before you institute a program, research your company culture to understand what current employee

attitudes are toward injury and returning to work. That way, after you create an official Return to Work

Program, it will be easier to evaluate and determine whether there has been a positive mindset shift.

Get to know your company culture at all levels and from a range of perspectives. Visit worksites and

talk to employees to understand how your current Return to Work Program – or lack thereof –

functions. Develop a needs assessment to determine how much work you need to do to shift company

culture and practice.

Step 3: Demonstrate a Commitment to Early Return to Work

Make sure all levels of employees recognize that early return to work after an injury speeds up the

recovery process and reduces the likelihood of permanent disability. Everyone from upper

management to hourly employees should understand the goals, purpose and background on the

program. There is no use taking large strides to enact a program if management does not support and

recognize the need.

These elements are the foundation and support for your Return to Work Program. Take plenty of time for

these steps before moving on to create your program.

RETURN TO WORK PROGRAM ELEMENTS

Steps 4 through 7 of this guide will go straight into your written Return to Work Program, as

they are the elements that will help you take action and establish a plan.

Step 4: Create Goals

State GDI Insurance Agency, Inc.’s purpose in creating the program and emphasize management’s

commitment to making it work. Keep it positive, but be sure employees understand the Return to

Work Program is a serious initiative. This is also the place in your written program to define what

type of duty you offer or require – your program can revolve around transitional duty, alternate

duty or both.

Example Goal Statement: GDI Insurance Agency, Inc.’s Return to Work Program is in place to

accommodate injured workers by identifying new duties or modifying jobs to meet their physical

capacities and respect doctors’ restrictions. The goal is to return our employees to productive work,

regular schedule and full wages as soon as possible, as they are the essential livelihood of GDI

Insurance Agency, Inc.. Because our employees are so valuable, we have both a Transitional Duty

Program, which is designed as a therapeutic tool to accelerate return to work by addressing

physical and emotional limitations, and an Alternate Duty Program, which is a placement service


for workers deemed unable to perform the functions of their pre-injury job by a medical

professional.

Step 5: Create a Return to Work Team and Define its Responsibilities

A Return to Work Team is crucial to the program’s success because it provides leaderships, sets

expectations for injured employees, acts as a communication channel between all involved parties

and ensures the Return to Work program is being administered correctly. This team should consist

of a representative from each of the following areas, and you may want to use these role

descriptions directly in your written program:

- Senior Management

o Ensures implementation; promotes and supports the program

- Vocational Rehabilitation Specialist**

o Serves as expert on physical and psychosocial aspects of disability, can testify in

court as vocational expert, understands job analysis and physical capacities

forms, supervises Return to Work Program administration

- Workers’ Compensation Professional (either an in-house representative or someone from

your insurance company or TPA)

o Provides medical information, problem-solving skills and general support

- Supervisor(s)

o Directly supports the injured worker’s return to work by giving out the modified

assignments, facilitating communication and ensuring the employee does not

exceed the assigned physical restrictions

- Union

o Promotes the GDI Insurance Agency, Inc. Return to Work Program to union

membership; advocates for employees and assists in return to work planning for

specific employees when requested

- Panel Physicians

o Prepares a medical treatment plan that is safe, promotes early return to work

and keeps GDI Insurance Agency, Inc.’s aggressive program in mind

- Human Resources Department

o Coordinates with Return to Work Program Manager on employee benefits, wages,

Family Medical Leave and workers’ compensation issues

**the best candidate for team lead or Return to Work Program Manager

The Return to Work Team should also be responsible for creating and maintaining a transitional

duty job bank, which is discussed in greater detail in Step 6.

Step 5: Develop a Work Flow Chart Outlining the Return to Work Process

A crucial part of the Return to Work Program is the process and steps involved in administration. A

good flow chart will eliminate confusion about the program and identify proper actions for all levels

of employees, and this flow chart should serve as your action plan. Request a sample Work Flow

Chart to use with your Return to Work Program from GDI Insurance Agency, Inc. at 209-634-2929.

Step 6: Develop and Maintain a Job Bank

Again, the Return to Work Program Manager should be the owner of the job bank; however, he or

she should meet with supervisors and managers to identify adequate transitional tasks. You could

also encourage all employees to submit ideas for transitional duty tasks as they come up – the

tasks in the job bank can, and should, range in levels of physical strain required to complete them.

This job bank can be as formal or informal as necessary, but it is essentially a laundry list of tasks

or assignments across all departments that ideally should get done but often get overlooked

because of lack of staff, time, funds, etc. It might be helpful to organize the job bank both by work

location and by physical demand level to find the most appropriate task for an injured employee.


Keep in mind that while safety of the employee is the most important, it is also essential to the

success of your Return to Work Program that the tasks are productive. Make every effort to keep

work hours and days off consistent with the injured employee’s work schedule, but also make sure

he or she is aware that the transitional task may require an altered schedule. If the transitional

duties in the job bank are considerably less skilled than the employee’s pre-injury job, consider

paying less than full-duty rate if your state laws allow. You will pay less in payroll taxes and, at the

same time, you will motivate the worker to return to full duty.

Step 7: Create a Communication and Education Plan

To make your Return to Work Program a success, you should have full cooperation with all parties

involved. This includes the injured worker, his or her supervisor, union officials, medical providers

and workers’ compensation professionals. If any of these parties is not fully committed to the

program, your success will be limited.

To maximize the program’s communication efforts:

- Provide written program descriptions and definitions – make these items readily

available, accessible and readable

- Keep job descriptions and job analyses on file for each employee in case he or she ever

becomes injured

- Review the Return to Work Program with employees during new hire orientation and

periodically throughout the year

- Provide one-on-one sessions with injured employees to reiterate expectations and assign

transitional tasks

FINAL STEPS

The last step in implementing a Return to Work Program is to include a way to measure your progress. Step 8 will offer suggestions on how you can manage your Return to Work Program.

Step 8: Recordkeeping

Put simply, the best way to measure the success of your program is to collect return to work data.

Financial savings may be difficult to quantify, but one thing you can do is track the money you save

on an individual basis for each injured employee who goes on transitional duty. Also, it will be

helpful to keep a Transitional Duty Database. Use this to chart:

- The number of employees assigned to transitional duty

- The average duration of transitional duty assignments

- The percent of employees filing new claims each month who are placed in transitional

duty

- All receipts of work release to transitional duty assignments from a medical professional

Step 9: Distribute the Plan

After you create your written Return to Work Program using these guidelines, distribute it to

employees at every level. In your written Return to Work Program that you distribute, in addition

to all of the steps included in this guide, be sure to include:

- Your Return to Work Policy, which should have a section to be signed, dated, returned to

Human Resources and filed for each employee

- The Return to Work Flow Chart

- Other relevant material that may be helpful to employees experiencing work related

injuries or illness, including workers’ compensation information

You might also consider holding a meeting to build support for the program and so that employees

can ask questions. Revisit the Return to Work Program annually to re-evaluate the written

procedures and policies and analyze its success.


If you have further questions about writing or implementing your Return to Work Program, GDI

Insurance Agency, Inc. can assist you.

8

Return to Work Policy Prepared by: GDI Insurance Agency, Inc.


Location: _________________

Effective Date:

Revision Number: 2

PURPOSE This policy is in place to ensure GDI Insurance Agency, Inc. provides meaningful work activity for employees

who are temporarily unable to perform all, or portions, of their regular work assignments or duties. This policy applies to employees suffering from either work or non-work related injury or illness. The goal is to allow valued company employees to return to productive, regular work as quickly as possible. By providing temporary transitional or modified work activity, injured employees remain an active and vital part of the company. Studies show that a well-constructed Return to Work Policy reduces lost time days, allows workers to recover more quickly and makes for a more positive work environment.

SCOPE All active employees who become temporarily unable to perform their regular job due to a compensable work related or non-work related injury or illness may be eligible for transitory work duties within the provisions of this program. Return to work tasks may be in the form of:

- Changed duties within the scope of the employee’s current position - Other available jobs for which the employee qualifies outside the scope of his or her current position - An altered schedule of work hours

DEFINITIONS - Transitional duty is a therapeutic tool used to accelerate injured employees’ return to work by

addressing the physical, emotional, attitudinal and environmental factors that otherwise inhibit a prompt return to work. These assignments are meant to be temporary and may not last longer than 90 days, though GDI Insurance Agency, Inc. permits multiple 90-day assignments back-to-back if it is medically warranted.

- Alternate duty is a part of GDI Insurance Agency, Inc.’s Return to Work Policy that is designed as a placement service for individuals who have reached maximum medical improvement and are still unable to perform the essential functions of their pre-injury job.

APPLICABILITY Length of Duty

If work is available that meets the limitations or restrictions set forth by the employee’s attending practitioner, that employee may be assigned transitional or modified work for a period not to exceed 90 days. Transitional or light duty is a temporary program, and an employee’s eligibility in these reduced assignments will be based strictly on medical documentation and recovery progress.

Daily Application An employee’s limitations and restrictions are effective 24 hours a day. Any employee who fails to follow his or her restrictions may cause a delay in healing or may further aggravate the condition. Employees who disregard their established restrictions, whether they are at work or not, may be subject to disciplinary action up to and including termination.

Qualification Transitional or modified duty will be available to all employees on a fair and equitable basis with temporary assignments based on skill and abilities. Eligibility will be based upon completion of the Return to Work Evaluation Form by the employee’s attending medical professional. An employee on

modified duty will be considered part of the regular shift staffing, with recognition of the employee’s limitations within the department.

RESPONSIBILITIES The following responsibilities apply to various levels within the company.

- Senior management will ensure the policy’s enforcement among all levels at GDI Insurance Agency, Inc. and will actively promote and support this policy and the Return to Work Program as a whole.

- Supervisors will support the employee’s return to work by identifying appropriate modified assignments and ensuring the employee does not exceed the physician’s set restrictions. Supervisors will also stay in regular contact with absent employees and communicate GDI Insurance Agency, Inc.’s

attendance expectations clearly. They are also responsible for reporting any problems with employees and this policy to the return to work manager or program supervisor.

9 | R e t u r n t o W o r k P o l i c y

- Injured workers will notify their supervisors in a timely manner when their condition requires an absence. They will closely follow their physician’s medical treatment plan and actively participate in GDI Insurance Agency, Inc.’s Return to Work Program, which includes following all the guidelines of

this policy. Injured employees will also help supervisors identify potential options for transitional

duties that they discover. While supervisors are responsible for maintaining constant communication with the injured employee, the worker also has the obligation to maintain contact with GDI Insurance Agency, Inc. about their condition and status. The injured worker will complete all the required paperwork in a timely manner.

- Return to Work Program Manager will be trained in understanding the physical and psychosocial aspects of disability and will also understand the nuances of GDI Insurance Agency, Inc.’s Return to Work Program, policies and all associated forms. This individual will also be able to testify in court as a

vocational expert if necessary. He or she will provide program leadership by facilitating communication between union officials, employees, managers and medical providers. This manager will own the responsibility of creating the GDI Insurance Agency, Inc. Job Bank and will assist supervisors with on-site problem solving.

PROCEDURE Work Schedule GDI Insurance Agency, Inc. will do everything in its power to tailor the restricted work schedule to the

injured employee’s normal, pre-condition work schedule. However, depending on the job limitations, it may be necessary for the employee to take on a specifically designed, temporary schedule to accommodate these restrictions. Payment of Wages

If qualified authorities determine an employee’s injury is work related, GDI Insurance Agency, Inc. will pay benefits and wages in accordance with the state workers’ compensation statute and with the company’s human resources policies. If an employee on modified duty is unable to report to work, the employee may then be charged for up to eight hours of sick leave per shift. Employees performing modified duty on a restricted work week (during the first 90 days of workers’ compensation leave) will receive payment for hours worked from the company, while hours not

worked will be reimbursed according to workers’ compensation guidelines. An employee performing transitional duty for a non-work related injury or illness on a normal work schedule shall receive an hourly rate for all time worked that may not necessarily equal the full-duty

hourly rate.

Employees performing transitional duty on a restricted work week following a period of Short Term Disability (STD) may receive a combination of regular pay and partial disability benefits. The employee and the GDI Insurance Agency, Inc. Human Resources Department will work out this combination on a case-by-case basis. If employees take vacation or there is a holiday during restricted duty, they are entitled to their regular vacation selection or holiday pay as it would apply to normal, non-restricted duty.

Communication Expectations If an employee is unable to work in any capacity and the company approves of the absences, the employee must stay in constant communication with the Return to Work Program Manager and the direct supervisor. Each must receive an update of the employee’s medical status on at least a weekly basis. Failure to do so may result in a reduction in available benefits and discipline up to and including termination.

Medical Appointments GDI Insurance Agency, Inc. does not allow employees to schedule medical appointments that interfere with working hours. Employees may use time off for medical appointments if they have it available and if they coordinate the absence in advance with their supervisor. Non-emergency medical appointments not scheduled in advance may be cause for denial of time off.

The employee’s physician must complete the GDI Insurance Agency, Inc. Return to Work Evaluation Form for each visit to evaluate the impairment. It is the employee’s responsibility to inform GDI Insurance Agency, Inc. of his or her medical status after each doctor visit. This applies to both work related and non-work related injuries and illnesses that interfere with assigned. Employee Procedures


1. In the event an injury or illness is work related, report it to your supervisor immediately, or no later than the end of the shift on which the injury occurs.

2. Complete and sign a Report of Injury Form.

3. Let your supervisor know that you are seeking medical treatment and obtain a Return to Work

Evaluation Form. The Return to Work Evaluation form must be completed for each practitioner visit regardless of your choice of physician and regardless whether the condition is work related or not.

4. Participate in the Return to Work Program on temporary transitional work for up to 90 days while your physician and supervisor continuously review your condition.

REFUSAL TO PARTICIPATE If you are unable to return to your regular job but are capable of performing transitional duty, you must return to transitional duty. Employees who choose not to participate in the GDI Insurance Agency, Inc. Return to Work Program or follow all regulations in this Return to Work Policy may become ineligible for state workers’ compensation benefits and, in some cases, refusal to participate may be a basis for termination. Unpaid Family Medical Leave will apply upon refusal and disability benefits will cease. FAMILY MEDICAL LEAVE

In the case of reduced work time, the Family Medical Leave and Partial Disability programs may apply to compensate for lost wages due to fewer hours. Contact the Human Resources Department for further details.



Return to Work Policy

GDI Insurance Agency, Inc.’s primary goal is to accommodate injured workers by identifying or

modifying jobs to meet their physical capacities and allowing them to return to work as quickly and

smoothly as possible. The company is committed to individualizing return to work programs based

around the individual’s physical capabilities and will review all task assignments regularly to ensure

duties are appropriate.

We are committed to early return to work and recognize that it speeds up the recovery process and

reduces the likelihood of permanent disability. GDI Insurance Agency, Inc. employees are expected

to show the same commitment to the program by following the Return to Work Policy and all

guidelines of the Return to Work Program. The Return to Work Program requires a team approach,

so employees are expected to cooperate with the management team, supervisors and medical staff

should they ever become injured and unable to perform your full job duties.

Prior to working on any GDI Insurance Agency, Inc. job site, each employee is expected to have

read the entire Return to Work Policy, which includes the following sections:

Purpose

Scope

Applicability

Responsibilities

Procedure

Refusal to Participate

Family Medical Leave

If you have any uncertainty or questions regarding the content of these policies, you are required

to consult your supervisor. This should be done prior to signing and agreeing to the GDI Insurance

Agency, Inc. Return to Work Policy.

I am aware of and have read GDI Insurance Agency, Inc.’s Return to Work Policy, and I understand

the requirements and expectations of me as an employee. Should I become injured or ill and

unable to carry out my regular duties, whether it happens inside or outside the workplace, I fully

recognize GDI Insurance Agency, Inc.’s expectations of me during my recovery. I also know that

GDI Insurance Agency, Inc. reserves the right to pay less than my full-duty rate during transitional

work if it is justified.

I understand that if I choose not to participate in the Return to Work Program or follow this policy’s

guidelines, I may become ineligible for state workers’ compensation benefits and, in some cases,

my refusal may be grounds for termination.

Employee Signature: __________________________________________

Date: ____________________________

12


RETURN TO WORK EVALUATION FORM To Be Completed by Medical Practitioner

Please complete the following

items based on your estimated clinical evaluation. Any item that you do not believe you can answer should be marked N/A. GDI Insurance Agency, Inc. has a return to work program for eligible employees, and this evaluation form will help us determine this employee’s return to work availability.

In an eight-hour workday, patient can: (circle or X next to full capacity of each activity)

A. Sit 1 2 3 4 5 6 7 8 (hours)

B. Stand 1 2 3 4 5 6 7 8 (hours)

C. Walk 1 2 3 4 5 6 7 8 (hours)

Note: In terms of an eight-hour workday: Occasionally = 1 to 33 percent of the day

Frequently = 34 to 66 percent of the day

Continuously = 67 to 100 percent of the day

Not at All Occasionally Frequently Continuously

Bend/Stoop

Squat

Crawl

Climb

Reach Above Shoulder Level

Crouch

Kneel

Balance

Push/Pull

Carry:

Up to 10 lbs.

11-24 lbs.

25-34 lbs.

35-50 lbs.

51+ lbs.

Employee Name:

Date of Birth: Date of Impairment:

Diagnosis:

Prognosis:

13

Lift: Not at All Occasionally Frequently Continuously

Up to 10 lbs.

11-24 lbs.

25-34 lbs.

35-50 lbs.

51+ lbs.

Patient can use hands for repetitive action, such as: (indicate YES or NO)

Simple Grasping Firm Grasping Fine Manipulation

Right YES NO YES NO YES NO

Left YES NO YES NO YES NO

Patient can use feet for repetitive movements, as in operating foot controls, walking, etc. (circle YES or NO

and total number of hours repetitive movements are allowed in each workday)

Right

YES NO 1 2 3 4 5 6 7 8

Left YES NO 1 2 3 4 5 6 7 8

Both (simultaneously) YES NO 1 2 3 4 5 6 7 8

Restriction of Activities Involving:

None Mild Moderate Total

Unprotected Heights

Operate Moving Machinery

Temperature Changes

Operating Forklifts

Driving Automobiles

Dust, Fumes & Gas Exposure

Can the patient perform some type of work? YES NO

If so, how many hours per day? 1 2 3 4 5 6 7 8

How long is the patient’s impairment expected to last?

Do these restrictions apply to activities outside of working hours? YES NO

If no, explain:

Physician Name/Date Completed (Print): /

Physician Signature/Phone Number /

14

INSIGHTS

RISK

GENERAL INDUSTRY

The key to spending fewer

WC claims dollars is more than

just stopping a few workplace

accidents; it’s having a sound

safety program designed to

continuously improve.

Five Steps to Reducing Workers’ Compensation CostsWhen a company experiences significant increases in workers’ compensation costs, it usually triggers internal activities aimed at reducing insurance costs and spending. The key to spending fewer dollars is more than just stopping a few accidents; it is having a sound safety program designed to continuously improve. This is where a safety program that, at a minimum, is compliant with the Occupational Safety and Health Administration (OSHA) standards can yield significant savings for GDI Insurance Agency, Inc. by reducing injuries and illnesses, saving workers’ compensation dollars. Building a Solid OSHA Program

There are five entry-level steps GDI Insurance Agency, Inc. can take to have a well-rounded safety program that produces a safe work environment, achieves OSHA compliance, reduces accidents and ultimately reduces workers’ compensation costs.

1. Develop the various programs required by the OSHA standards.

2. Integrate those programs into the daily operations. 3. Investigate all injuries and illnesses. 4. Provide training to develop safety competence in all

employees. 5. Audit your programs and your work areas on a regular

basis to stimulate continuous improvement. Develop Programs Required by OSHA Standards

Aside from being a requirement for general industry, the OSHA standards provide a good pathway to incident reductions. A good number of accidents stem from poorly developed, trained or implemented OSHA programs: slips or trips may come from poor housekeeping efforts or not keeping walking and working surfaces clear, not using personal protective equipment may result in excessive lacerations, and poor lifting techniques can result in strains.

Many of the OSHA standards require some type of written program be developed and then communicated to employees. Experience shows that companies with thoroughly developed OSHA-compliant programs have fewer accidents, more productive employees and lower workers’ compensation costs. Integrate Programs into Daily Operations

Policies alone won’t get results; the program must move from paper to practice to succeed. Putting a policy into practice requires a strategic plan clearly communicated to key participants, good execution of that plan based on developed competencies, and a culture that inspires and rewards people to do their best. When developing any business initiative, there must be an emphasis on frontline supervisors and helping them succeed. Every good business person knows that any new program - safety, quality or anything else - lives and dies with the frontline

supervisor. If the frontline supervisor knows the program and wants to make it happen, the program succeeds; if not, the program is a source of constant struggle, and an endless drain on resources and energies. Providing supervisors with knowledge and skills through training is critical to the success of any program. A solid OSHA program, integrated into the daily operation and led by competent supervisors is just the beginning. Successful safety programs focus on being proactive instead of always reacting to issues. Accident investigations provide an excellent source of information on real or potential issues present in the workplace. Investigate All Injuries and Illnesses

Workers’ compensation is designed to recompense employees for injuries or illnesses that arise from or out of the course of employment. This should not come as a surprise, but increasing claims drive up workers’ compensation costs. To

GDI Insurance Agency, Inc.: Your risk management partner

This Risk Insights is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance

professional for appropriate advice. Content © 2007-2010 Zywave, Inc. All rights reserved.

15

INSIGHTS RISK

GENERAL INDUSTRY

reduce those costs, you must simply reduce your accidents. And the ability to reduce accidents is significantly enhanced when those accidents are fully investigated instead of simply being reported. Accident reports are historical records only citing facts, while accident investigations go deeper to find the root cause and make improvements. Businesses that stop rising workers’ compensation costs have an effective accident investigation process that flushes out the root cause of the problem. Unless the root cause is discovered, recommendations for improvement will remain fruitless. Again, training proves beneficial because a supervisor skilled in incident analysis is a better problem solver for all types of production-related issues, not just safety. All accidents should be investigated to find out what went wrong and why. Some may suggest investigating every accident is a bit over the top and only those that incur significant costs are worthy of scrutiny. But ask yourself this question: If you only investigated serious quality concerns instead of every little deviation, would your quality program still be effective? Companies with solid quality programs investigate and resolve every deviation from quality standards. If your emphasis is only on those incidents that have to be recorded on the OSHA 300 log, you close your eyes to the biggest accident category: first aid-only incidents. Many companies get upset about recordables or lost time accidents because of the significant costs involved, but they don’t realize that the small costs and high numbers of first aid-only incidents really add up. Statistics show that for every 100 accidents, 10 will be recordable and one a lost-time incident. If you investigate only recordables or lost time accidents, 89 go unnoticed. Would you consider a quality program that allows an 89 percent failure rate successful? Reducing serious accidents means you must reduce your overall rate of all accidents – including first aid-only incidents. That only happens when every incident is fully investigated to find the root cause, and remedial actions are identified and integrated into the daily operation. Training and Auditing for Continuous Improvement

The final steps focus on training and auditing your program for continuous improvement. Training plays a significant role in safety and in reducing workers’ compensation costs. The goal of training is to develop competent people who have the knowledge, skill and understanding to perform assigned job responsibilities. Competence, more than anything else, will improve all aspects of your business and drive down costs. Supervisors must have the knowledge and ability to integrate every safety program into their specific areas of responsibility. Every employee must know what is expected of them when it comes to implementing safe work procedures. Once the programs are developed and implemented, they must be

reviewed on a regular basis to make sure they are still relevant and effective. This might require a significant change in how you manage your safety program, but if your workers’ compensation rates are high, it may be time to make this leap. Tangible Benefits

1. Studies indicate there is a return on investment and that companies see direct bottom-line benefits with a properly designed, implemented and integrated safety program.

2. A competency-based safety program is compliant with OSHA requirements and therefore reduces the threat of OSHA fines.

3. A competency-based safety program lowers accidents, and fewer accidents lower workers’ compensation costs. When incidents do occur, a competency-based safety program fully evaluates the issue and finds the root cause to prevent reoccurrence and provides a workplace that is free from recognized hazards.

4. A safer workplace creates better morale and improves employee retention. Auditing keeps your programs fresh and effective and drives continuous improvement.

5. A competency-based program produces people who are fully engaged in every aspect of their job and are satisfied and fulfilled producing high-quality goods and services.

How Can We Assist You?

At GDI Insurance Agency, Inc., we are committed to helping you establish a strong safety program that minimizes your workers’ compensation exposures. Contact us today at 209-634-2929 to learn more about our OSHA compliance, safety program, and accident investigation tools and resources.

16

Coverage Insights Understanding Your Workers’ Compensation Experience Modification Factor The key to calculating a workers’ compensation premium is the experience modification factor, also known as your mod. Understanding your company’s mod and the data used to obtain it provides you with the information necessary to determine how to keep your workers’ compensation premium under control. Who calculates the mod factor?

Most states use the National Council on Compensation Insurance (NCCI) to collect data and calculate the experience modification factor. NCCI is a private corporation funded by member insurance companies. However, the following states have their own government-run rating bureaus that are separate from the NCCI: California, Delaware, Indiana, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Pennsylvania, Texas and Wisconsin. How is a mod calculated?

Calculating the experience modification factor is complex, but the underlying theory and purpose of the formula is straightforward. Your company’s actual losses are compared to its expected losses by industry type. The formula incorporates factors that take into account company size, unexpected large losses and the difference between loss frequency and loss severity to achieve a balance between fairness and accountability How does my mod affect my premiums?

The mod factor represents either a credit or debit that is applied to your workers’ compensation premium. A mod factor greater than 1.0 is a debit mod, which means that losses are worse than expected and a surcharge will be added to your premium. A mod factor less than 1.0 is a credit mod, which means the losses are better than expected, resulting in a discounted premium. What is the experience rating period?

The mod is calculated using loss and payroll data for an experience rating period. The experience rating period typically includes data for three policy years, excluding the most recently completed year. For example, for a mod factor calculated on January 1, 2010, data would be used for the January 1, 2006-2007, January 1, 2007-2008 and January 1, 2008-2009 policy periods. The data for the January 1, 2009-2010 would be excluded.

Time period used in Workers’ Compensation Experience Rating

Experience Rating Period Data Excluded Rating Year

1/1/2006 1/1/2007 1/1/2008 1/1/2009 1/1/2010

Claims Costs For Each Policy Period

Payroll data by state and class code

Mod Calculated Mod Applied

Three years of data is used to provide a more accurate reflection of the losses, smoothing out

the impact of any bad or good year of losses.

The actual loss data is separated into primary and excess pools. Primary losses, which are the first $5,000 of every loss, measure frequency. Excess losses — or amounts more than $5,000 — measure severity. The formula penalizes loss frequency by including all loss amounts in the calculation. The reason for this is that these types of claims can be controlled through proactive loss control programs. Losses in excess of $5,000 are capped at levels that vary by state. This minimizes the impact that any single claim can have on your premium. In approved states, medical-only claims figures are reduced by 70 percent.

Expected losses are then calculated by using your payroll data by state and class code, and

applying the Expected Loss Ratio (ELR). The ELR is provided by each state rating bureau. These

figures are also broken down into expected primary losses and expected excess losses.

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How do your losses compare?

The final mod calculation compares your actual primary and excess loss figures to those expected

for a company of the same size and industry type. To understand how workers’ compensation

losses to your business compare to state industry averages, contact GDI Insurance Agency, Inc. to

review your experience modification worksheet.

How can you control your mod?

Your mod factor has a direct impact on your workers’ compensation premium. The key to

controlling your insurance costs is through accident prevention.

- The mod is calculated based on data reported to the rating bureau by past insurers. Incorrect

or incomplete data can cause incorrect mod factors. Review the loss and payroll data to make

sure the calculation is complete and accurate.

- Losses remain in the experience rating formula for three years. The experience modification

factor is influenced more by small, frequent losses than by large, infrequent ones.

- Develop a sound safety program, return to work program and prevention procedures to reduce

loss frequency.

- An effective self-inspection and accident investigation program are critical to managing claim

frequency.

- Implement an active claims management program to manage outstanding reserves and focus

on efficiently resolving open claims.

- Report all claims to your carrier immediately.

- Take an aggressive approach to providing light duty to all injured employees upon their release

from treatment.

- Set safety performance goals for supervisory roles. Success in achieving safety goals should

be used as one measure during performance appraisals.

- Train employees on their responsibilities for safety, and enforce conformance with these

responsibilities.

- Frequently communicate with employees, on a formal and informal basis, regarding the

importance of safety.

How can your experience rating save you money?

Establishing a proactive safety program is an effective way to reduce losses, which impacts your

mod and workers’ compensation premium. Contact us today at 209-634-2929. We have the loss

control experience to help you advance safety and control your workers’ compensation premium.

This Coverage Insights is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Photography © Outdoor Office V154 Getty Images, Inc. Source: Insurance Information Institute. Reprinted with permission.

Remember, these warning signs are simply indicators. If you are suspicious of a claim, alert your insurance carrier.

Content © 2007-2010 Zywave, Inc. All rights reserved.

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The WC (workers' compensation) insurance system is a no-fault method of paying workers for medical expenses

and wage losses due to on-the-job injuries. While the majority of WC claims are truthful, the National Insurance

Crime Bureau reports that billions of dollars of false claims are submitted each year. To help you detect possible

WC fraud, experience shows a claim may be fraudulent if two or more of the following factors are present:

1. Monday Morning: The alleged injury occurs either “first thing Monday morning,” or late on a

Friday afternoon but not reported until Monday.

2. Employment Change: The reported accident occurs immediately before or after a strike, a

layoff, the end of a big project or at the conclusion of seasonal work.

3. Job Termination: If an employee files a post-termination claim:

- Was the alleged injury reported by the employee prior to termination?

- Did the employee exhaust his/her unemployment benefits prior to claiming workers’

compensation benefits?

4. History of Changes: The claimant has a history of frequently changing physicians, addresses

and places of employment.

5. Medical History: The employee has a pre-existing medical condition that is similar to the

alleged work injury.

6. No Witnesses: The accident has no witnesses, and the employee's own description does not

logically support the cause of injury.

7. Conflicting Descriptions: The employee's description of the accident conflicts with the

medical history or First Report of Injury.

8. History of Claims: The claimant has a history of numerous suspicious or litigated claims.

9. Treatment is Refused: The claimant refuses a diagnostic procedure to confirm the nature or

extent of an injury.

10. Late Reporting: The employee delays reporting the claim without a reasonable explanation.

11. Hard to Reach: You have difficulty contacting a claimant at home, when he/she is allegedly

disabled.

12. Moonlighting: Does the employee have another paying job or do volunteer work?

13. Unusual Coincidence: There is an unusual coincidence between the employee’s alleged

date of injury and his/her need for personal time off.

14. Financial Problems: The employee has tried to borrow money from co-workers or the

company, or requested pay advances.

15. Hobbies: The employee has a hobby that could cause an injury similar to the alleged work

injury.

GDI Insurance Agency, Inc. ■ 801 Geer Road Turlock, CA 95380

Tel: 209-634-2929 ■ Web: http://www.gdiinsurance.com/

15 Warning Signs

of Workers’

Compensation Fraud

19

Drug Testing Proves Positive Results in Decreasing

Workers’ Compensation Mods

Study revealing the results of drug testing and

its impact on in reducing workers' compensation

experience-rating modification factors

Provided by: GDI Insurance Agency, Inc.

20

Introduction From international corporations to small local contractors, construction companies that test for drugs appear to be successfully reducing workplace injuries, according to a new Cornell University study. "While drug testing is controversial, the study provides useful data on a readily measurable outcome," says its author, Jonathan Gerber, a May 2000 graduate of Cornell's School of Industrial and Labor Relations. The study was part of his three-year independent research project. ILR Professor of Labor Economics, Robert S. Smith served as adviser to the study, which has caught public attention and is pending publication in a national journal. In the past 15 years, drug testing in the U.S. workplace has gone from ground zero to widespread employer acceptance. In 1983, less than 1 percent of employees were subject to drug testing. Today, about 49 percent of full-time workers are subject to some form of workplace drug testing, according to the Substance Abuse and Mental Health Services Administration, a division of the U.S. Department of Health and Human Services. This growth is particularly evident within the construction industry. High rates of drug and alcohol abuse in the industry, coupled with the high-risk, safety-sensitive nature of the industry for workers and the general public, have prompted many companies to implement a variety of safety strategies, including drug testing. In his study, An Evaluation of Drug Testing in the Workplace: A Study of the Construction Industry, Gerber proposed to test how effective drug-testing programs at construction companies were in making the workplace safer. He developed a survey that he sent in December 1999 to a randomly selected national sample of officials at 405 construction companies. Officials

at 71 companies responded. Gerber examined the data on injury incident rates and workers' compensation experience-rating modification factors compiled over a five-year period and supplied by National Council on Compensation Insurance.

The study's findings On average, those companies in the study sample that tested workers and job applicants for drugs experienced a 51 percent reduction in injury rates within two years of implementing a drug-testing program, compared with only a 14 percent decline in injury rates in the average construction company in general during the same two-year period. Specifically the injury rate at construction companies that tested for drug use dipped from 8.92 incidents per 200,000 work-hours before the drug-testing program was put in place to 4.36 incidents afterward. Construction companies that test for drugs may save substantially on their workers' compensation premiums. As a result of fewer job site accidents and injuries, the average drug-testing company in the study sample experienced an 11.41 percent reduction in its workers' compensation experience-rating modification factor. At the same time, companies in the study sample that did not employ drug testing saw no such decline. Experience-rating modification factors are part of a program to help insurance companies establish workers' compensation premiums based on company safety records. Companies with an average safety record within their industry and state have an experience-rating modification factor of 1.0, while companies with a better than average safety record have a modification factor of less than 1.0. Drug testing is most effective in reducing workers' compensation experience-rating modification factors in the first three years following the implementation of a program.

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The vast majority of respondents, whether or not their companies tested for drugs, believed substance abuse was a "moderately serious problem" in the construction industry. However, most believed workplace drug and alcohol abuse dropped between 1994 and 1999. Seventy-two percent of the respondents at companies with drug-testing programs in place said they believed the benefits of drug testing outweighed the costs. Respondents generally believed that their company's drug-testing programs had had a positive impact in virtually every respect. They cited better overall safety of the work environment, reductions in workers' compensation costs and improved quality of job applicants. The number one reason why officials at the construction companies surveyed tested employees and job applicants for drugs was to promote worker and customer safety. Respondents believed that drug testing contributed positively to a company's image and was an effective deterrent to workplace drug abuse. The number one reason why some employers did not test employees and job applicants for drugs was concern of increased legal liability: other reasons included high cost and restrictive state legislation. The study also revealed that larger construction companies were significantly more likely to test workers for drugs and alcohol. That finding suggests small firms are particularly vulnerable to substance abuse problems, as drug users may intentionally seek out employment at companies where their substance abuse is not likely to be detected. While the study's results are interesting and suggest that further examination of the subject

is warranted, "people should bear in mind that the data used [in Gerber's study] were from firms willing to participate," said Smith, Gerber's adviser.

Managing your mod As this study indicates, the positive effects of a drug-free workplace policy are many — and it all starts with proper screening of job applicants and periodic random testing of employees. GDI Insurance Agency, Inc. has the expertise to assist your company in developing or enhancing your current drug and safety policies. Contact us today at 209-634-2929 to learn how we can assist you in reducing your injury rates and mod to impact your bottom line.

This document is for information purposes only. It is not intended to be exhaustive nor should any discussion or opinions be construed as legal

advice.

*REPRINTED WITH PERMISSION FROM JONATHAN GERBER, CORNELL UNIVERSITY. CORNELL'S SCHOOL OF

INDUSTRIAL AND LABOR RELATIONS

22

Your experience modification factor, or mod, is an important

component used in calculating your workers’ compensation

premium. If you can control your mod, you can control your price

— so we’ve gathered some top tips designed to positively impact

your bottom line.

1. Investigate accidents immediately and thoroughly. Take corrective

action to eliminate hazards. Be aware of fraud.

2. Report all claims to carrier immediately. Alert carrier to any

serious, potentially serious, or suspect claims. Frequently monitor

the status of the claim and communicate with the adjuster to

resolve as quickly as possible.

3. Take an aggressive approach to providing light duty to all injured

employees upon their release from treatment. Supervise light duty

employees to assure their conformance with restrictions

4. In serious cases that involve lost time, communicate with the

claims adjuster so that they recognize your interest in returning

the injured employee back to gainful employment.

5. Set safety performance goals for persons with supervisory

responsibility. Success in achieving safety goals should be used as

one measure during performance appraisals.

6. Develop a written safety program and train employees in their

responsibilities for safety. Incorporate a disciplinary policy into the

program, one that holds employees accountable for breaking the

rules or rewards them for correctly following safety procedures.

7. Frequently communicate with employees, on a formal and informal

basis, regarding the importance of safety.

8. Make safety a priority. Senior management must be visible in the

safety effort and must support improvement.

9. Evaluate accident history and near-misses at least monthly. Look

for trends in experience and take corrective action on worst

problems first, as soon as the problems manifest themselves.

10. Hire GDI Insurance Agency, Inc. to ensure success.

For more information,

contact:


209-634-2929

Top 10 Ways to Control Your Mod

23

Presented by GDI Insurance Agency, Inc.

27


29


31


Comprehensive Safety & Health Inspection Checklist Prepared by: GDI Insurance Agency, Inc.

Date: This inspection checklist is designed to help facilitate a walking inspection of your area(s) of responsibility. Answer each question as it pertains to your area. Negative answers indicate a

potential safety concern and must be addressed and corrected as necessary.

Safety Administration Employee Postings

Yes No Inspection Point

Is the required OSHA workplace poster displayed in a prominent location?

Are emergency telephone numbers posted where they can be readily found in case of emergency?

Where employees may be exposed to any toxic substances or harmful physical agents, has

appropriate information concerning employee access to medical and exposure records and Material Safety Data Sheets been posted or otherwise made readily available to employees?

Are signs concerning various hazards, such as room capacities, floor loading, biohazards, exposures to x-ray, or other harmful substances posted where appropriate?

Recordkeeping


Is the company required to maintain an OSHA 300 Log?

Is there a log that tracks all injuries and illnesses, including ―first aid only‖ situations?

Are all recordable injuries or illnesses posted on the OSHA 300 Log within six days of the incident?

Is there an OSHA 301 (or suitable alternative) for every entry on the OSHA 300 Log?

Is the OSHA 300A Annual Summary posted between February 1st and April 30th each year?

Are employee medical records kept confidential?

Are training records for employees maintained and accessible for review when required?

Have arrangements been made to maintain required records for the legal period of time for each specific type record? (Some records must be maintained for 40 years.)

Are operating permits up-to-date for such items as elevators, air pressure tanks and LPG tanks?

Are operating permits posted in their proper locations?

Safety & Health Program Management


Do you have an active safety and health program in operation that deals with general safety and

health program elements as well as the management of hazards specific to your worksite?

Is one person clearly responsible for the overall activities of the safety program?

In your department, does everyone clearly understand their responsibility toward safety?

Do you have a safety committee that meets regularly and reports back on its activities?

Do you have a working procedure in place for handling in-house employee complaints or concerns regarding safety and health issues?

Are you keeping your employees informed of various safety improvements made within the company?

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Medical Services and First Aid


Is there a hospital or clinic in close proximity to the workplace?

Are there people within your department who are trained in first aid procedures?

Do those employees who are expected to provide first aid as part of their job responsibilities receive the necessary training and vaccinations as outlined in various OSHA standards?

When employees have an exposure incident involving bloodborne pathogens, do you provide an immediate post-exposure medical evaluation?

Are medical personnel readily available for advice on matters of occupational health?

Are first aid kits easily accessible to each work area, with necessary supplies available?

Are first aid kits maintained and replenished when necessary?

When employees may be exposed to corrosive materials, such as acids, are means provided for

quick drenching or flushing of the eyes and body?

General Work Environment General Conditions


Are all worksites clean and orderly?

Are machines and work areas swept clean at the end of each shift or workday and are debris, scrap, and other waste picked up and removed from the work area?

Are work areas adequately illuminated?

Walkways


Are aisles and passageways kept clear and passable?

Are aisles and walkways marked as required?

Are working surfaces kept dry and free of wet or otherwise slippery conditions?

Are wet or slippery surfaces, inherent to the production operation, covered with non-slip material

or otherwise made safe?

Are holes in the floor, sidewalk, or other walking area repaired properly, or otherwise covered to prevent slips, trips or falls?

Is there safe clearance for walking in aisles where motorized equipment is used?

Are materials or equipment stored in such a way that sharp objects will not project into the aisle and create a hazard?

Are spilled materials cleaned up immediately?

Are changes of direction or elevation in walking or working surfaces readily identifiable?

Are aisles or walkways that pass near moving or operating machinery, welding operations or similar operations arranged so employees will not be exposed to hazards?

Is adequate headroom provided for the entire length of any aisle or walkway?

Are standard guardrails (42 inches high with a 21-inch mid-rail and 4-inch toeboard) provided whenever aisles, walkways, or working surfaces are elevated more than 30 inches off the floor or

work area?

Are bridges or crossovers provided over conveyors or similar hazards at strategic locations to

prevent people from crawling over or onto conveyor systems or similar hazards?

Floor or Wall Openings


Does a cover, guardrail, or equivalent provide protection on all sides of guard floor openings?

Are toeboards installed around the edges of permanent floor openings?

Are grates or similar type covers over floor openings designed so foot traffic or rolling equipment will not be affected by the spacing or construction of the grate?

Are unused portions of service pits and pits not actually in use either covered or protected by guardrails or equivalent?

Controling Your Workers Compensation Modification Factor

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