Adjuster X

Rear Ended

By: | January 25, 2016 • 2 min read
This column is based on the experiences of a group of long-time claims adjusters. The situations they describe are real, but the names and key details are kept confidential. Michelle Kerr is the editor of this column and can be reached at mkerr@lrp.com.

The cover letter on the loss report was curt and suggested that the claim be denied. The incident was a car accident involving a nurse case manager. Her vehicle slowed at an intersection and was rear-ended.

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I couldn’t reach the employee so I left a voice mail. The employer told me that at the time of the accident, their case manager, Eileen McCord, was enroute to see a client. Before that she’d been on a lengthy conference call from her car with another customer. When the call ended, she advised her manager she was running late for her next appointment.

McCord was admitted to the hospital with a concussion, cervical trauma, facial fractures, a fractured left arm and elevated glucose levels — she was diabetic. According to the employer, McCord was 54 years old, divorced, and had been employed there about two years. They said she was a good but not outstanding worker. They also noted that McCord wasn’t wearing her seatbelt at the time of the accident.

Return-to-work was looking less feasible and the treating doctor had placed restrictions on driving and prescribed antidepressants and pain medications.

My call with the broker was contentious — he demanded the claim be denied. Both he and the employer believed that since McCord wasn’t wearing her seatbelt, resulting in more severe injuries, she was negligent. I told him that my investigation was still ongoing and any decision now would be premature.

It took a few more days until I received the police report and it confirmed the seatbelt was not worn. The name of the other driver was obtained but my attempt to contact him was unsuccessful. There was no insurance on his vehicle.

I assigned a nurse case manager due to the severity of the injuries, the claimant’s age and history of diabetes. Reports from our case manager confirmed that the McCord had a concussion, fractured jaw, left wrist fracture, was periodically disoriented, had blurred vision and elevated glucose and had difficulty walking. A recorded statement would not be feasible at this point.

The claimant remained hospitalized six additional days and was transferred to a sub-acute facility. While there, she was not meeting her goals and the prognosis remained guarded. My case manager said she was having short-term memory problems. At that point, I received a representation letter from the claimant’s attorney demanding that we accept the case.

I spoke with my house counsel who felt the case was compensable. She noted that state law reduces benefits by 25 percent when seatbelts are not used. She didn’t see any viable basis for denial. She also felt that taking the reduction, though lawful, would result in unfavorable publicity.

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I accepted the case and benefits for indemnity and medical were paid. Our case manager continued to provide us with updates that were not encouraging due to continued neurological and vision problems.

Return-to-work was looking less feasible and the treating doctor had placed restrictions on driving and prescribed antidepressants and pain medications. A home health aide was requested and we agreed.

Ten months passed without much improvement. Opposing counsel claimed psych overlay and total disability. Independent medical exams were done. The claimant’s examiner found treatment was still required, noted depression, and felt existing restrictions precluded work.

Our examiner found the claimant reached maximum improvement and felt she could work if restrictions were lifted and hours limited. Further defense of the case would be time consuming and costly so reluctantly we accepted the case for lifetime disability.

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2015 NWCDC

Best Use of Nurse Case Managers

Nurses with soft skills can significantly improve outcomes on complex claims.
By: | November 13, 2015 • 2 min read
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Nurse case managers can vastly improve outcomes for injured workers and save a bundle for payers. The trick is to understand which claims will benefit from intervention and to use nurses with the right skill set.

“If an injury occurs from lifting equipment or falling from a height, the claim needs a nurse,” said Stephanie Perilli, senior director of medical and health management for The Home Depot, during a session at the National Workers’ Compensation and Disability Conference® & Expo on November 12.

In a comparison of claims more than 24 months old, the company saw a 12 percent savings on paid medical dollars and a 28 percent reduction on paid loss dollars for claims with nurse involvement.

For non-catastrophic cases, the company uses a model to determine whether to involve a nurse.

“Our results have significantly improved over the last three years,” she said.

In a comparison of claims more than 24 months old, the company saw a 12 percent savings on paid medical dollars and a 28 percent reduction on paid loss dollars for claims with nurse involvement.

But not every claim is appropriate for nurse intervention. A recent study determined that 25 variables, especially when some are in combination, can serve as triggers.

“If you’ve got an injured worker who is over 35, has no college degree, has injured a certain body part and undergone certain medical treatment, get a nurse as soon as possible,” said Mary O’Donoghue, VP of medical services for Helmsman Management Services.

In addition to the complexity of a claim, the nurse’s skill set can determine the value of involvement. Those nurses who are trustworthy can make the most difference.

“They can identify problems, educate folks, and redirect where needed,” O’Donoghue said.

Helmsman has found the most effective soft skills needed to move claims forward are communication with all parties involved, including family members; empathy, to establish trust with the injured worker; and collaboration, to make sure there is a plan in place and everyone involved is on the same page.

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at riskletters@lrp.com.
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Sponsored: State of Vermont

7 Questions to Answer before Choosing a Captive Insurance Domicile

Ask the right questions and choose a domicile for your immediate and long-term needs.
By: | February 5, 2016 • 7 min read
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Risk managers: Do your due diligence!

It seems as if every state in America, as well as many offshore locations, believes that they can pass captive legislation and declare, “We are open for business!”

In fact, nearly 40 states and dozens of offshore locations have enabling captive insurance legislation to do just that.

With so many choices how do you decide who is experienced enough to support the myriad of fiscal and regulatory requirements needed to ensure the long term success of your captive insurance company?

“There are certainly a lot of choices,” said Mike Meehan, a consultant with Milliman, an actuarial firm based out of Boston, Massachusetts, “but not all domiciles are created equal.”

Among the crowd, there are several long-standing domiciles that offer the legislative, regulatory and infrastructure support that makes captive ownership not only a successful risk management tool but also an efficient entity to manage and operate.

Selecting a domicile depends on many factors, but answering these seven questions will help focus your selection process on the domiciles that best fit your needs.

 

1. Is the domicile stable, proven and committed to the industry for the long term?

ThinkstockPhotos-139679578_700The more economic impact that the captive industry has on the domicile, the more likely it is that captives will receive ongoing regulatory and legislative support. The insurance industry moves very quickly and a domicile needs to be constantly adapting to stay up to date. How long has the domicile been operating and have they been consistent in their activity over the long term?

The number of active captive licenses, amount of gross premium written in a domicile and the tax revenue and fees collected can indicate how important the industry is to the jurisdiction’s bottom line. The strength of the infrastructure and the number of jobs created by the captive industry are also very relevant to a domicile’s commitment.

“It needs to be a win – win situation between the captives and the jurisdiction because if not, the domicile is often not committed for the long term,” said Dan Kusalia, Partner with Crowe Hortwath LLP focused on insurance company tax.

Vermont, for example, has been licensing captives since 1981 and had 589 active captives at the end of 2015, making it the largest domestic domicile and third largest in the world. Its captive insurance companies wrote over $25 billion in gross written premiums. The Vermont State Legislature actively supports an industry that creates significant tax revenue, jobs and tourist activity.

 

2. Are the domicile’s captives made up of your peer group?

The demographics of a domicile’s captive companies also indicate how well-suited the location may be for a business in a particular industry sector. Making sure that the jurisdiction has experience in the type and form of captive you are looking to establish is critical.

“Be among your peer group. Look around and ask, ‘Who else is like me?’” said Meehan. “Does the jurisdiction have experience licensing and regulating the lines of coverage for other businesses in your industry sector?”

 

3. Are the regulators experienced and consistent?

Vermont_SponsoredContentIt takes captive-specific expertise and broad experience to be an effective regulator.

A domicile with a stable and long-term, top-tier regulator is able to create a regulatory environment that is consistent and predictable. Simply put, quality regulation and longevity matter a lot.

“If domicile regulators are inexperienced, turnaround time will be slower with more hurdles. More experience means it is much easier operating your business, especially as your captive grows over time,” said Kusalia.

For example, over the past 35 years, only three leaders have helmed Vermont’s captive regulatory team. Current Deputy Commissioner David Provost is one of the longest tenured chief regulators and is a 25-year veteran in the captive insurance industry. That experienced and consistent leadership enables the domicile to not only attract quality companies, but also to provide expert guidance on the formation process and keep the daily operations running smoothly.

 

4. Are there world-class support services available to help manage your captive?

Vermont_SponsoredContentThe quality of advisors and managers available to assist you will have a large impact on the success of your captive as well as the ease of managing the ongoing operations.

“Most companies don’t have the expertise to operate an insurance company when you form a captive, so you need to help build them a team,” Jeffrey Kenneson, a Senior Vice President with R&Q Quest Management Services Limited.

Vermont boasts arguably the most stable and experienced captive infrastructure in the world. Many of the leading captive management companies have their headquarters for their Global, North America and U.S. operations based in Vermont. Experienced options for captive managers, accountants, auditors, actuaries, bankers, lawyers, and investment professionals are abundant in Vermont.

 

5. Can the domicile both efficiently license and provide on-going support to your captive as it grows to cover new lines of coverage and risks?

Vermont_SponsoredContentLicensing a new captive is just the beginning. Find out how long it takes for the application to get approved and how long it takes for an approval of a plan change of your captive’s operations.

A company’s risks will inevitably change over time. The captive will need to make plan changes which can include adding new lines of business. The speed with which your domicile’s regulatory branch reviews and approves these plan changes can make a critical difference in your captive’s growth and success.

The size of a captive division’s staff plays a big role in its speed and efficiency. Complex feasibility studies and actuarial analyses required for an application can take a lot of expertise and resources. A larger regulatory team will handle those examinations more efficiently. A 35-person staff like Vermont’s, for example, typically licenses a completed application within 30 days and reviews plan changes in a matter of days.

 

6. What are the real costs to establishing and managing your captive?

Vermont_SponsoredContentIt is important to factor in travel costs, the local costs of service providers, operating fees, and examination fees. Some states that do not impose a premium tax make up for it in high exam fees, which captives must be prepared for. Though Vermont does charge a premium tax, its examination fees are considered some of the least expensive options in the marketplace.

It is also important to consider the ease and professionalism of doing business with a domicile in the ongoing operations of your captive insurance company.

“The cost of doing business in a domicile goes far beyond simply the fixed cost required. If you can’t efficiently operate due to slow turn-around time or added obstacles, chances are you have made the wrong choice,” said Kenneson.

 

7. What is the domicile’s reputation?

Vermont_SponsoredContentMake sure to ask around and see what industry experts with experience in multiple domiciles have to say about the jurisdiction. Make sure the domicile isn’t known for only licensing certain types of captives that don’t fit your profile. Will it matter to your board of directors if your local newspaper decides to print a story announcing your new insurance subsidiary licensed in some far away location?

Are companies leaving the jurisdiction in high numbers and if so, why? Is the domicile actively licensing redomestications — when an existing captive moves from one domicile to another? This type of movement can often be a positive indicator to trends in a domicile. If companies of a particular size or sector are consistently moving to one state, it may indicate that the domicile has expertise particularly suited to that sector.

Redomestications made up 11 of the 33 new captives in Vermont in 2015. This trend is a positive one as it speaks to the strength of Vermont. It reinforces why Vermont is known throughout the world as the ‘Gold Standard’ of domiciles.

Asking the right questions and choosing a domicile that meets your needs both today and for the long term is vital to your overall success. As a risk manager you do not want surprises or headaches because you did not ask the right questions. Do the due diligence today so that you can ensure your peace of mind by choosing the right domicile to meet your needs.

For more information about the State of Vermont’s Captive Insurance, visit their website: VermontCaptive.com.

 

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with the State of Vermont. The editorial staff of Risk & Insurance had no role in its preparation.




The State of Vermont, known as the “Gold Standard” of captive domiciles, is the leading onshore captive insurance domicile, with over 1,000 licensed captive insurance companies, including 48 of the Fortune 100 and 18 of the companies that make up the Dow 30.
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