2015 Teddy Award Winner

Revamped Program Takes Flight

The American Airlines and U.S. Airways merger meant integrating workers’ compensation programs for a massive workforce. The results are stellar. 
By: | November 2, 2015 • 8 min read
at LAX in Los Angeles, Tuesday, August 25, 2015. Photo by Brandon Wade

When the merger of American Airlines and U.S. Airways was completed on Dec. 9, 2013, creating the world’s largest airline, the task of integrating 100,000 employees covered by workers’ compensation looked like Mission Impossible.


But newly named director of American Airlines workers’ compensation Jennifer Saddy, who formerly was director of workers’ compensation at U.S. Airways, seized the bull by the horns, and in short order, a complete overhaul of the massive workers’ comp program was on its way.

“We basically started an entirely new workers’ comp program,” said Saddy. “We put together a new workers’ comp team and redefined the roles of that team. We selected almost all new service vendors.

“So from my perspective, we were doing all this and at the same time working with our front-line operations folks to get this accomplished while they were involved in very different aspects of the mergers and integrations,” said Saddy, who also holds the title of director of corporate insurance and risk management.

Known as an enthusiastic, highly focused team leader, one of the first initiatives Saddy undertook was to realign her team’s goals and put a plan in place to resolve the 5,874 American Airlines legacy claims.

Pulling the Team Together

Saddy and her brokers at Willis held weekly calls with the adjusting team to discuss the most costly claims and to ensure the team had a plan to reach a resolution.

Jennifer Saddy, director of workers’ compensation, director of corporate insurance and risk management, American Airlines

Jennifer Saddy, director of workers’ compensation, director of corporate insurance and risk management, American Airlines

The combined forces achieved a consequential 20 percent reduction in overall open claims, and a 29 percent reduction in aged pending (claims more than two years or older) in under one year.

“We started the closing push at the end of January 2014 and results are through year ending Dec. 31, 2014. In fact, as of Dec. 31, 2014, the combined airline had less open claims than pre-merger American Airlines stand-alone.”

Right from the start, Saddy was determined to move out on as many fronts as possible.

She quickly reached out to the new airline’s four big unions.

“I meet with the unions on a quarterly basis,” said Saddy. “But for the most part, our union contracts don’t have a lot of information about workers’ comp. So some of the most common complaints from the unions have been customer service-oriented and the employees feeling they are not being supported and getting phone calls returned. If the adjuster is not returning a phone call, I need to hear that real-time.”

“We basically started an entirely new workers’ comp program. We put together a new workers’ comp team and redefined the roles of that team.” — Jennifer Saddy, director of workers’ compensation, director of corporate insurance and risk management, American Airlines

As part of her plan to roll out the new workers’ compensation plan as seamlessly as possible, Saddy called a two-day, all-hands-on-deck summit that included her team and all vendors.

“We discussed the merger of the two airlines as well as outlining goals and expectations,” said Saddy.

“However, to make it not only interesting but fun, we did a ‘rock star’ theme. Only rock stars were invited to come as a part of the new program.”

Her rock stars included the 19 members of her workers’ compensation team, newly chosen TPA Sedgwick, Willis, and various other vendors.

“We are now planning for our second annual summit,” Saddy said. “And instead of a rock star theme, in this one we are all superheroes.”


Another aggressive, vital step Saddy took early on was to hire Sedgwick as the combined company’s TPA. An RFP was issued in early April 2014, and Sedgwick was hired on May 23 of that year.

Sedgwick has 79 adjusters working on the American account: 54 adjusters who are entirely assigned to the account, with 25 adjusters that are “designated” (they also handle claims for other accounts).

“The Sedgwick team has worked incredibly hard this past year to make our workers’ comp program a success,” said Saddy. “As we have undergone significant change due to the integration, they have proven themselves to be a flexible partner and embraced our new culture.

“They were quick to adopt the realignment of our workers’ comp goals, while delivering immediate results,” Saddy added.

Changes in Claims Management

Tied into the new agreement with Sedgwick was a revamp of the account instructions an adjuster must follow. Some examples of the changes include:

  • The adjuster must receive approval from Saddy’s team prior to assigning defense counsel.
  • The adjuster must receive settlement authority from Saddy’s team to engage in settlement discussions with the employee/attorney.
  • The adjuster reserve authority limit was reduced.

Another very successful initiative has been the significant expansion of the company’s nurse case management program. Saddy and her team selected three vendors, with more than 30 nurses overall assigned to the program.

“One of the things that I think has been very helpful in moving a claim forward, reducing the duration and getting the employee back to work sooner is that we’ve assigned nurses to basically every claim where the employee is not performing their regular job duty, or where they’re working with some kind of restriction,” said Saddy.

The role of the nurses is to be a medical advocate and communicate with the employee. They also provide return-to-work information to the front-line managers as well as coordinate with the medical team involved.

“The nurses’ goal is to be the liaison between all three of these parties to get information to where it needs to go,” said Saddy.

Saddy also moved the responsibility of communicating with an injured employee from her team to the local supervisor or manager. This provided more personal outreach, Saddy said.

This transition also enabled the corporate workers’ comp team to better manage the overall claims process, including oversight of service partners.

On another new front, at the end of last year, Saddy and her team called a summit meeting of all the attorneys who handle claims for American.

The team presented a litigation performance scorecard that outlined how attorneys’ progress would be managed and how their results would be measured.

Safety and Training

Training is a hallmark of Saddy’s program. Claims adjusters, nurses, doctors and union members who are involved in the workers’ comp program are regularly given training in the airport environment and maintenance facilities, as well as at the same on-site facility where flight attendants train.

“We have the adjusters push and pull a 250-to-300 pound beverage cart,” said Saddy. “We also have them open up the aircraft door on every airplane type we use. We also have them train on the baggage ramps, where many of our serious injuries occur.

“This gives them a better sense of how airline employees work on the job.”


Another innovative injury prevention program that Saddy and her team have been involved with is the expansion of on-site athletic trainers through Fit Matters. American has provided fitness equipment for use by its employees.

The result, Saddy said, has been an 11 percent reduction in soft tissue/musculoskeletal injuries, which represent the majority of the company’s injuries.

These athletic trainers work with employees to develop proper lifting techniques and emphasize the importance of stretching before shifts.

Measurable Improvements

Saddy and her team also established two pharmacy providers, using Helios as its pharmacy benefits manager and Prium to review pharmacy data. Based on a variety of triggers and warning signs, they perform physician-to-physician discussions to ensure appropriate prescriptions.

“By partnering with these two vendors and staying focused on early intervention, we have seen success in reducing the risk to our employees from over-prescribing while reducing pharmacy spending to approximately 7 percent of total medical spending, compared to the industry average, which is approximately 15 percent of medical spending,” Saddy said.

Since Saddy and her team have swung into action, all of the workers’ comp metrics have improved — and all of the reductions are significantly better than industry averages.

Among the most impressive achievements was a 22 percent reduction in collateral requirements from its carrier, based on the airline’s improved financial condition and the new workers’ compensation approach and processes.

“It’s this type of partnership that helps us reduce workplace injuries, and in turn, means a healthier, safer workplace.” — Paul Morell, vice president of safety, security and environment, American Airlines

In addition, total incurred costs decreased by 12 percent, or $80 million, and total outstanding reserves were reduced by 10 percent, or $27 million, in the past year. The current year closing ratio (current year defined as claims that open and close within the same year) increased to 72 percent, compared to the prior year’s closing ratio of 60 percent.

Not only was Saddy’s team able to close more current year claims than in years past, but they also closed them more quickly while reducing costs.

Paul Morell, vice president of safety, security and environment, American Airlines

Paul Morell, vice president of safety, security and environment, American Airlines

“This illustrates that the employee is receiving more timely information and appropriate care while allowing the employee to recover and not only return to work sooner but to return to their family as well,” Saddy said.

Paul Morell, AA’s vice president of safety, security and environment, said, “Part of being an industry leader in safe and reliable airline operations is making sure our safety programs are reflective of the need and risk of our operations. By working together with our workers’ comp team, we are able to develop programs that address any issues immediately.


“It’s this type of partnership that helps us reduce workplace injuries, and in turn, means a healthier, safer workplace,” he said.

For Saddy, workers’ compensation is about helping an employee during a difficult time.

“Workers’ compensation can be complex, challenging and confusing, but it doesn’t need to be,” she said.

“At the end of the day, it’s about engaging our employees and providing the best medical care available, allowing our employees to return to work as soon as possible and as safely as possible.”


Read more about all of the 2015 Teddy Award winners:

AA LAX TuesdayRevamped Program Takes Flight: The American Airlines and U.S. Airways merger meant integrating workers’ compensation programs for a massive workforce. The results are stellar.


112015_03_stater 150X150Checking Out Solutions: From celebrating safety success to aggressively rooting out fraud and abuse, Stater Bros. Markets is making workers’ comp risk management gains on multiple fronts.


112015_04_columbus 150X150Revitalizing the Program: In three years, the Columbus Consolidated Government was able to substantially reduce workers’ compensation claims costs, revamp return-to-work and enhance safety training.


112015_05_barnabas 150X150Spreading Success: Barnabas Health wins a Teddy Award for pushing one hospital’s success in workers’ comp systemwide.


Steve Yahn is a freelance writer based in New York. He has more than 40 years of financial reporting and editing experience. He can be reached at [email protected]
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Insurance Industry

A Bird’s Eye View

Insurers see drones as a way to improve the service they provide to insureds.
By: | October 15, 2015 • 7 min read

Unmanned aerial vehicles (UAVs) — aka drones — are an integral but polarizing part of 21st century life.


The benefits are well-known: whether used as a tool or a toy, miniature remote-controlled aircraft equipped with high-resolution cameras can provide stunning aerial shots as well as photograph hard-to-access areas, which explains their increasing popularity with both consumers and businesses.

Drones are also inexpensive. Starter kits cost only $75 to $150 and cheaper four-propeller drones typically sell for $600 to $700. Sophisticated models with cameras can run to about $3,500. But the pricing continues to drop while the optics packages steadily improve, said Grant E. Goldsmith, vice president of Avalon Risk Management and president of its overwatch division.

“Many new drones have 4K cameras, which are really nearly Hollywood quality,” he said. “It is really the drop in price point in good optics that is making them more practical to many kinds of users.

“All drones are subject to loss and damage in a hard landing situation but at $3,500 they approach the level of ‘disposable aviation’ assets for many users.”

However, growing demand is accompanied by increasing disquiet over the “nuisance potential” of drones to violate privacy and cause accidents, particularly when used in proximity to aircraft.  Idaho-based Snake River Shooting Products recently launched the “drone munition” — a shot shell containing steel ball bearings that fits a 12-gauge shotgun, for customers seeking to repel the “Drone Apocalypse.”

These concerns haven’t prevented companies from seeking Federal Aviation Administration (FAA) authorization to use drones for commercial purposes. As Risk & Insurance® reported in April, four insurers — American International Group Inc., Erie Insurance Group, State Farm Mutual Automotive Insurance Co., and United Services Automobile Association — were among 125 companies submitting successful applications.

Matthew Ouellette Owner Ouellette and Associates

Matthew Ouellette
Ouellette and Associates

Applicants also included corn processing giant Archer-Daniels-Midland Co, which got the go-ahead to use drones for locating and assessing crop damage to accelerate claims processing. The company plans to start employing the technology during 2016.

Pennsylvania-based Erie Insurance said that FAA approval would enable the company to offer policyholders an improved service, yet retain the personal touch.

“We see drones as high tech meets human touch,” said Gary Sullivan, the company’s vice president of property and subrogation claims.

“Drones will help our claims adjusters get an early look at potential damage without putting themselves in harm’s way due to unsafe conditions, such as on a steep roof or at the site of a fire or natural disaster,” he said. “The sooner we can get in and assess damage, the sooner we can settle claims and help make our customers whole again so they can move on with their lives.”

At State Farm, spokesman Jim Camoriano said that employing drones is in line with the insurer’s work with vehicle manufacturers to advance airbag and seatbelt technology.

“Our use of unmanned aircraft is another example of State Farm’s commitment to the use of technology to better serve our customers. So far, feedback from those outside the industry continues to be optimistic on the potential benefits of using this type of aircraft.”

Since gaining the FAA’s approval to test and use drones as part of its commercial operations, State Farm has been engaged in flight testing UAVs at private test sites near its corporate offices in Bloomington, Ill. As yet, the insurer hasn’t determined a date for test completion.


Camoriano acknowledged that press coverage raises several questions regarding the use of the technology, but said that concerns arise mostly from recreational use of UAVs.

“We consider customer privacy one of our top priorities, and our use of this technology will adhere to all applicable laws and regulations to ensure consumer privacy,” he said.

Waiting on the FAA

Reports on UAVs’ potential usually mention their usage in the wake of disasters, to provide high-resolution images while accessing areas either too dangerous or inaccessible for manual inspection. A recent example cited is the explosions at a Chinese chemicals warehouse in Tianjin on Aug. 12. Footage shot from a drone shortly afterward vividly captured the extent of the damage.

To date, the reality for U.S. firms has been less dramatic, said Matt Ouellette, owner of Indiana claims service Ouellette & Associates and 2015-16 president of the National Association of Independent Insurance Adjusters (NAIIA). His firm uses drones mainly for commercial building inspections up to 300 feet above ground level and in the immediate aftermath of intersection vehicle collisions to assess the impact.

“Before we go to the expense of renting a boom lift, which costs around $1,500, we can use a drone for no more than $200 to $300 plus the adjuster’s fee for a preliminary inspection to ascertain the cause of damage and whether it is covered by insurance,” said Ouellette. “In some cases, it results merely from poor maintenance of the building.

“A fixed-wing drone flying over an area hit by hurricane or tornado can map out the area as a whole and provide insurers with valuable information on their likely exposure and how many of their insureds have suffered loss or damage. They can home in close and get good pictures.

“You can get FAA approval via a Section 333 exemption, which many businesses are applying for and getting these days. But the majority of drone operators likely operate without FAA approval.” — Grant E. Goldsmith, vice president of Avalon Risk Management

“We use four-prop hovercraft drones rather than the fixed wing variety for our commercial buildings and intersection accident inspections. They’re less expensive than fixed-wing, the latter being the type to which the FAA pays most attention.”


While insurers recognize the benefits of using drones for post-catastrophe inspection, they haven’t actually started using them, he added.

One obstacle is that the FAA’s readiness to exempt companies from the ban on commercial drone use isn’t yet accompanied by regulations setting out guidelines as to what work is and isn’t acceptable.

The FAA, said Avalon’s Goldsmith, “hasn’t yet published its rules for small drone usage with the national airspace, and these rules will likely not be published until 2017, so the interim period will continue to see a growing number of commercial users dodging both the FAA and local regulations at the state and city level while flying for business purposes.

“You can get FAA approval via a Section 333 exemption, which many businesses are applying for and getting these days. But the majority of drone operators likely operate without FAA approval.”

Ouellette said that in the absence of such clarification, some carriers are holding back from using drones themselves or authorizing their use by claims adjustment specialists.

“The passage of any legislation is likely to prove complex as many different parties need to be considered. The aim is for regulation that’s useful and not overly stringent.”

“I assume that many insurers are waiting for the dust to settle on the privacy and regulatory concerns before fully embracing drone technology,” agreed Stephen L. Brown, owner and president of Baton Rouge, La.-based Brown Claims Management Group.

“As an independent adjusting firm, we have had several insurers inquire about using our drone to assist in the inspection of roof claims.

“But it seems that it comes mostly from a place of curiosity, from the standpoint of seeing just what type of imagery this technology can produce in contrast to that generated by more traditional means.”

Brown also struck a note of caution on whether insurers could extend the use of drones beyond investigating catastrophe and hard-to-access risks to include more routine work.

“They could be, but to be honest, the small drones that we use are not easily flown in anything less than optimum weather conditions or where obstructions are nearby — and so we still only use them in a small percentage of investigations and inspections.”

However, there are some applications beyond property losses — specifically general liability and transportations losses — where aerial video can be a tool in documenting the scene of the accident, Brown said.

No Threat to Adjusters

Longer-term, does the drone spell the end of the traditional claims adjuster?

No way, said Ouellette, particularly as UAVs still have to be piloted.

“Certainly they can provide great images; however, the adjuster still needs to follow up with measurement and assessment work. He or she still has to provide much of the essential detail that drones aren’t able to capture.”


Brown agreed. “Drones will continue to be but one tool available to the field adjuster and will never fully replace the personal inspection. There will be instances in which the drone inspection is just not practical under the circumstances, due to adverse weather, physical obstructions, and the like.

“There will never be a day,” he said, “when drones can 100 percent be a replacement for adjuster ‘boots on the roof’ when it comes to property inspections or the personal touch that human claims adjusters can bring to loss investigations, appraisals and settlements.”

Graham Buck is editor of gtnews.com. He can be reached at riskletters.com.
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Sponsored Content by CorVel

Telehealth: The Wait is Over

Telehealth delivers access to the work comp industry.
By: | November 2, 2015 • 5 min read


From Early Intervention To Immediate Intervention

Reducing medical lag times and initiating early intervention are some of the cornerstones to a successful claims management program. A key element in refining those metrics is improving access to appropriate care.

Telehealth is the use of electronic communications to facilitate interaction between a patient and a physician. With today’s technology and mass presence of mobile devices, injured workers can be connected to providers instantaneously via virtual visits. Early intervention offers time and cost saving benefits, and emerging technology presents the capability for immediate intervention.

Telehealth creates an opportunity to reduce overall claim duration by putting an injured worker in touch with a doctor including a prescription or referral to physical therapy when needed. On demand, secure and cost efficient, telehealth offers significant benefits to both payors and patients.

The Doctor Will See You Now

Major healthcare players like Aetna and Blue Cross Blue Shield are adding telehealth as part of their program standards. This comes as no surprise as multiple studies have found a correlation between improved outcomes and patients taking responsibility for their treatment with communications outside of the doctor’s office. CorVel has launched the new technology within the workers’ compensation industry as part of their service offering.

“Telehealth is an exciting enhancement for the Workers’ Compensation industry and our program. By piloting this new technology with CorVel, we hope to impact our program by streamlining communication and facilitating injured worker care more efficiently,” said one of CorVel’s clients.

SponsoredContent_Corvel“We expect to add convenience for the injured worker while significantly reducing lag times from the injury to initiating treatment. The goal is to continue to merge the ecosystems of providers, injured workers and payors.”

— David Lupinsky, Vice President, Medical Review Services, CorVel Corporation

As with all new solutions, there are some questions about telehealth. Regarding privacy concerns, telehealth is held to the same standards of HIPAA and all similar rules and regulations regarding health information technology and patients’ personal information. Telehealth offers secure, one on one interactions between the doctor and the injured worker, maintaining patient confidentiality.

The integrity of the patient-physician relationship often fuels debates against technology in healthcare. Conversely, telehealth may facilitate the undivided attention patients seek. In office physicians’ actual facetime with patients is continually decreasing, citing an average of eight minutes per patient, according to a 2013 New York Times article. Telehealth may offer an alternative.

Virtual visits last about 10 to 15 minutes, offering more one on one time with physicians than a standard visit. Patients also can physically participate in the physician examination. When consulting with a telehealth physician, the patient can enter their vital signs like heart rate, blood pressure, and temperature and follow physical cues from the doctor to help determine the diagnosis. This gives patients an active role in their treatment.

Additionally, a 2010 BioMed Central Health Services Research Report is helping to dispel any questions regarding telehealth quality of care, stating “91% of health outcomes were as good or better via telehealth.”

Care: On Demand

By leveraging technology, claims professionals can enhance an already proactive claims model. Mobile phones and tablets provide access anywhere an injured worker may be and break previous barriers set by after hours injuries, incidents occurring in rural areas, or being out of a familiar place (i.e. employees in the transportation industry).

With telehealth, CorVel eliminates travel and wait times. The injured worker meets virtually with an in-network physician via his or her computer, smart phone or tablet device.

As most injuries reported in workers’ compensation are musculoskeletal injuries – soft tissue injuries that may not need escalation – the industry can benefit from telehealth since many times the initial physician visit ends with either a pharmacy or physical therapy script.

In CorVel’s model, because all communication is conducted electronically, the physician receives the patient’s information transmitted from the triage nurse via email and/or electronic data feeds. This saves time and eliminates the patient having to sit in a crowded waiting room trying to fill out a form with information they may not know.

Through electronic correspondence, the physician will also be alerted that the injured worker is a workers’ compensation patient with the goal of returning to work, helping to dictate treatment just as it would for an in office doctor.

In the scope of workers’ compensation, active participation in telehealth examinations, accompanied by convenience, is beneficial for payors. As the physician understands return to work goals, they can ensure follow up care like physical therapy is channeled within the network and can also help determine modified duty and other means to assist the patient to return to work quickly.


Convenience Costs Less

Today, convenience can often be synonymous with costly. While it may be believed that an on demand, physician’s visit would cost more than seeing your regular physician; perceptions can be deceiving. One of the goals of telehealth is to provide quality care with convenience and a fair cost.

Telehealth virtual visits cost on average 30% less than brick and mortar doctor’s office visits, according to California state fee schedule. In addition, “health plans and employers see telehealth as a significant cost savings since as many as 10% of virtual visits replace emergency room visits which cost hundreds, if not thousands, of dollars for relatively minor complaints” according to a study by American Well.

“Telehealth is an exciting enhancement for the Workers’ Compensation industry and our program. By piloting this new technology with CorVel, we hope to impact our program by streamlining communication and facilitating injured worker care more efficiently,” said one of CorVel’s clients.

Benefits For All

Substantial evidence supports that better outcomes are produced the sooner an injured worker seeks care. Layered into CorVel’s proactive claims and medical management model, telehealth can upgrade early intervention to immediate intervention and is crucial for program success.

“We expect to add convenience for the injured worker while significantly reducing lag times from the injury to initiating treatment,” said David Lupinsky, Vice President, Medical Review Services.

“The goal is to continue to merge the ecosystems of providers, injured workers and payors.”

With a people first philosophy and an emphasis on immediacy, CorVel’s telehealth services reduce lag time and connect patients to convenient, quality care. It’s a win-win.

This article was produced by CorVel Corporation and not the Risk & Insurance® editorial team.

CorVel is a national provider of risk management solutions for employers, third party administrators, insurance companies and government agencies seeking to control costs and promote positive outcomes.
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