Navigating new risks in workers’ compensation

So, what to do? Employers are taking action such as conducting virtual ergonomic reviews and providing cash allowances for better-quality chairs and furniture with adjustable keyboard and monitor positions.

“Safety and risk management budgets have become very large,” Moore says. “Safety investment has increased exponentially for home offices because employers don’t want to end up paying out claims.”

Drug abuse

Pandemic stresses also led to a growing use of marijuana, which can lead to impairment and workplace accidents. Still, proving impairment can be difficult.

“If somebody gets hurt at work, to dispute a worker’s comp claim, you’d have to establish that somehow there was a nexus between the person’s use of marijuana and the injury,” Free says. “You’d have to show they were high at the time they got hurt.”

The topic is more complicated if marijuana is being used to treat a medical condition in a state where it is legalized for such purposes.

“Some state legislatures and courts are struggling with the marijuana issue as it relates to workers’ comp,” Sieberg says. “If marijuana is used in a treatment program and has a positive effect on an injured employee, should it be covered? In many cases, the answer is still unclear.”

Employers should consult with their attorneys for insight into the nexus between regulation and workplace practices.

Addiction to opioids, as well as use of other drugs, can lead to workplace absences and illnesses that require medical attention. Employers are responding by introducing zero-tolerance workplace drug policies.

“Many companies have pretty strict rules about drug use today,” Free says. “They don’t care what you do out of work, but if you come to work high or drunk or on drugs, they have the right to kick you off campus right away.”

Supervisors are also being trained in the difficult skill of spotting possible drug use.

“Somebody can be an addict, but they don’t look wasted or like a drunk or stoned person,” Free says. “They look normal. You don’t even know until they have an overdose.”

A related issue is that of overtreatment with drugs. The poor handling of workers’ comp claims can lead to drug addiction, so more employers are taking a hands-on approach to monitoring the prescriptions given to their personnel.

“You have to see where the money’s going and keep tight control of it,” Adelson says. “Every employer needs to ask: ‘If one of my people gets hurt, what process will we use to monitor the medical treatment?’ You want to have the best control you can.”

Comorbidities

COVID-produced stress has also sparked an increase in long-term health complications called comorbidities, which are the simultaneous presence of two or more medical diagnoses.

Combinations of anxiety, substance abuse, hypertension, depression, obesity, diabetes and other conditions can lead to costly treatments that last for months or years. A recent study from the NCCI (National Council on Compensation Insurance) found that workers’ comp claims involving comorbidities have nearly tripled since 2000 and can be twice as costly as other claims.

Some employers are introducing wellness initiatives to mitigate the growth of comorbidities. A recent report from The Horton Group, an insurance, employee benefits and risk advisory firm, recommended addressing chronic health conditions and improving overall staff well-being to “reduce the severity of workers’ compensation claims and maintain low comorbidity rates.”

Closely affiliated with comorbidities are another workers’ comp headache: mega claims that typically incur losses of $3 million or more.

“In the context of workers’ compensation, a mega claim is typically a seven figure-claim resulting from some sort of fall or motor vehicle accident resulting in injury to the central nervous system or multiple injured body parts,” Tierney says. “We have seen an uptick in these ‘mega’ workers’ compensation claims over the last number of years for a number of reasons, and we continue to watch and see if COVID will add to this trend.

“I would say technology and medical advancements are the main reasons why we are seeing an uptick in mega claims,” Tierney adds. “Not only are injured workers more likely to survive severe injuries today due to these advancements, but they also often require more medical interventions, like organ transplants, to support their ability to fully recover. The medical costs associated with injury care continue to climb and will, in turn, continue to drive up the cost of workers’ comp claims.”

Another reason for the spike in mega claims: treatment delays.

“People are finally getting medical treatment they need after avoiding going to the doctor’s office for so long,” Moore says. “I’ve been seeing quite a few mega claims because people are delaying treatment for something like back surgery for 18 months. By the time they get treatment, the condition is worse.”

Mega claims can develop slowly when they arise from delayed treatment.

From the employer’s point of view, mega claims are expensive, complex and lengthy, the Horton report notes. Claims management can play a crucial role.

“Advances in analytics and predictive modeling have helped insureds and insurers identify claims that have the potential to be ‘mega’ a lot earlier on in the process than in years past,” Tierney says. “As a result, claims are being managed and reserved for at a lot higher thresholds earlier in the claim life cycle.”

Inexperienced workers

The pandemic created one more headache for workers’ compensation administrators: the Great Resignation. This created a vacuum in the nation’s work roles.

“People not coming back to work can contribute to lower workers’ comp costs in the short run but higher costs later on as employers hire replacements more susceptible to injury,” Free says. “When employers restaff, they often take on new and inexperienced people. Because they lack the required skills and training, they end up getting hurt.”

The problem of unskilled workers escalates when the scarcity of individuals to train new recruits leads to instruction by Zoom. And that is exactly what is happening now.

“We are seeing rashes of claims from people who are operating a certain machine for the first time,” Moore says. “The old rule of thumb tells us that 90 percent of accidents happen during the first week a person uses a machine. So we’re seeing a rash of claims because of the learning curves.”

According to a recent survey from the Golden Triangle Business Roundtable in Texas, employees with less than five years of experience contribute to 43 percent of overall workplace injuries. Such accidents can be particularly costly in riskier environments.

“The construction and manufacturing industries have the most problematic workers’ comp claims experience,” Sieberg says. “Many of the claims tend to be larger ones, and some are at the catastrophic level. A carpenter falling off a roof will likely incur significant injuries. Such a claim may cost the employer 20 or 25 points in experience rating. And that will continue on for a typical three-year experience period.”

Positive trends

Despite greater challenges in the workers’ comp environment, there is good news: A growing use of outpatient services is helping to reduce costs. So is the employment of telehealth and telemedicine – technologies that received tremendous boosts from the COVID pandemic.

“I expect telemedicine to become more and more common with employers,” Sieberg says. “It allows for faster response time for injured workers to get in front of qualified medical providers without having to make appointments or travel to physician offices. It also helps with remote case management, easier access to medication and quicker return to work by injured employees. The net effect can be a reduction in medical costs and ultimately in overall claims.”

And then there is a favorable trend in safety conditions. Employers have made great strides in reducing the risk of trips and falls, boosting ergonomics and increasing the safety of machinery.

“Workplace safety and claim management continue to be the two areas that an individual employer has the greatest control over when it comes to putting a cap on workers’ comp costs,” Sieberg says. “Good practices in both areas can save money.”

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Phillip M. Perry is an award-winning journalist who is published widely in the fields of business management, workplace psychology and employment law.

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