Risk Insider: Patty Hostine

What Is ‘Off Work’?

By: | May 26, 2015 • 3 min read
Patricia Hostine, MA, MBA, LPC, CRC, MSCC, CWCP, has more than 20 years’ experience in workers’ compensation from both the vendor and corporate perspectives. She is the Director of US Disability Management for The Flex N Gate Group of Companies. She can be reached at phostine@FLEXNGATE-MI.com.

Last week, I sat through a lovely presentation on FMLA processing. At one point, it was from the occupational health clinic perspective, which stated that stay at work and return to work are the first priority.

I was thinking, “Great, we’re all on the same page!” Then I realized that it was the same clinic we use. From experience, I know that’s not their past practice.

My first thought was “Why does an occupational health clinic even have a box that says ‘off work’ on the return to work slip?”

I’m a firm believer in the premise that we all have a part to play in the average workers’ compensation claim. The employee reports the injury and makes every effort toward recovery.

The employer files the claim and manages the employment relationship. The adjuster decides if the injury or accident is compensable under that specific jurisdiction with the facts as reported. Lastly, the clinic and doctors provide evaluation and treatment to get the employee to maximum medical improvement (MMI).

The hope is always that MMI is their pre-injury status, in all ways —medically, financially and emotionally the same as before the incident. This becomes difficult in the face of an ‘off work’ slip, which happens more often than it should.

This got me thinking about the nature of ‘work’ and how it impacts the employee’s ability to return to full function. The employees I’ve worked with have very specific tasks associated with their work, usually outlined by detailed work instructions. (Thank you, Quality!)

So when we get an ‘off work’ we are both surprised and dismayed. The employee now has a more difficult return to work process due to the financial burden of not being paid for the waiting period, a reduced salary and perhaps some discouragement about continuing to work for the employer. Making matters worse, the ‘off work’ slip gives no direction for what the employee should be doing to recover.

My first thought was “Why does an occupational health clinic even have a box that says ‘off work’ on the return to work slip?”

The employee goes home to heal or get treatment or use narcotics (that always keeps them off work).

What do employees do while ‘off work’? I have seen some video of employees that are not ‘working’ and they seem to perform all normal life activities. As a vocational counselor, I know that most tasks we do in everyday life are also things that other people do as an occupation.

For example, cook, fast food (DOT 313.374-010), chauffer, domestic service (DOT 359.673.010), maid (DOT 323.687-014) or laundry, domestic (DOT 302.685-010). By the way, I have just described my holiday weekend for you. I was not working but I did every one of those jobs in rotation.

It seems the only difference between work and activities of daily life is the pay. I conclude that ‘off work’ means ‘cannot do anything for pay.’

That limitation does not promote stay at work/return to work for anyone. If we can just convince doctors that ‘off work’ is a limitation that neither promotes recovery nor describes what the employee does while not working, we will all be better off.

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WC Cost Control

Non-Legislative Paths to Fix Workers’ Comp

Amid debate about legislative solutions to control workers' comp costs, let's not forget that core strategies such as modified duty programs can reap significant savings.
By: | May 4, 2015 • 3 min read
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Workers’ compensation has long been a burden to nearly all parties involved in the process. Be it the employer, injured employee or insurance company, few feel like they’re getting the fair end of the deal. It’s no surprise states across the country are taking a stab at legislative changes to improve the workers’ compensation system.

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Consider Tennessee. Not even a year after enacting workers’ comp reform, legislators are proposing to allow private employers to opt out of the traditional workers’ compensation plans in favor of writing their own rules.

While the driving force is to reduce the high costs typically associated with workers’ comp claims, it should be known that legislation is far from the only way to curb these costs. While there are multiple proactive back-end strategies, one of the most effective methods to significantly reduce claims costs is to enforce a well-defined modified duty program.

Beating Time, Saving Money, Reducing Risk With Modified Duty 

Time is the main culprit behind the high cost of workers’ comp. When employees remain off the clock, the financial burden of a claim quickly snowballs. Consider that lost time alone accounts for about 94 percent of typical claim costs. Implementing a modified duty program to get injured employees back to work sooner – even in a limited physical capacity – is essential to addressing this costly problem.

Not only does indemnity increase with every day an injured employee remains at home, it also becomes more likely that other issues will arise that can compound costs. Injured employees who remain at home for long periods of time to heal are more likely to fall victim to depression, weight gain or prolonged healing from remaining inactive, which in turn, keeps medical expenses and lost time expenses accumulating.

Without modified duty, costly litigation is also more likely to happen because of secondary medical issues arising or the breakdown of employer communication that can occur when an employee is out of the office.

Yet, a pre-determined, stringent modified duty allows injured employees to heal in a manner that:

  1. is approved by a physician
  2. gets an injured employee physically active and socially stimulated
  3. keeps communication open with employers and
  4. demonstrates value to judicial and medical officials as permanent or temporary impairment ratings are delivered.

It’s important for a modified duty program to be in place before an employee gets injured to eliminate confusion and, ultimately, prevent additional lost time.

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Work with employers to create modified job descriptions that accommodate a wide variety of injuries, including the inability to use one’s back, hands or legs, and keep them accountable to the program. Even if an injured employee does not live in the same area as the employer, as is often the case with truck drivers, for instance, he may be able to perform work for a local non-profit agency as a way to earn credit for modified duty.

While modified duty may be just one cog in the machine to reduce workers’ compensation claims costs, it can be the key to reducing significant expenses, removing the need for a legislative crutch.

Corey Lile is the founder and CEO of OccuSure Workers’ Compensation Specialists, a Brentwood, Tennessee-based Managing General Agent specializing in lowering workers’ compensation claims. He can be reached at clile@occusure.com.
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Sponsored: Lexington Insurance

Pathogens, Allergens and Globalization – Oh My!

Allergens and global supply chain increases risk to food manufacturers. But new analytical approaches help quantify potential contamination exposure.
By: | June 1, 2015 • 6 min read
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In 2014, a particular brand of cumin was used by dozens of food manufacturers to produce everything from spice mixes, hummus and bread crumbs to seasoned beef, poultry and pork products.

Yet, unbeknownst to these manufacturers, a potentially deadly contaminant was lurking…

Peanuts.

What followed was the largest allergy-related recall since the U.S. Food Allergen Labeling and Consumer Protection Act became law in 2006. Retailers pulled 600,000 pounds of meat off the market, as well as hundreds of other products. As of May 2015, reports of peanut contaminated cumin were still being posted by FDA.

Food manufacturing executives have long known that a product contamination event is a looming risk to their business. While pathogens remain a threat, the dramatic increase in food allergen recalls coupled with distant, global supply chains creates an even more unpredictable and perilous exposure.

Recently peanut, an allergen in cumin, has joined the increasing list of unlikely contaminants, taking its place among a growing list that includes melamine, mineral oil, Sudan red and others.

Lex_BrandedContent“I have seen bacterial contaminations that are more damaging to a company’s finances than if a fire burnt down the entire plant.”

— Nicky Alexandru, global head of Crisis Management at AIG

“An event such as the cumin contamination has a domino effect in the supply chain,” said Nicky Alexandru, global head of Crisis Management at AIG, which was the first company to provide contaminated product coverage almost 30 years ago. “With an ingredient like the cumin being used in hundreds of products, the third party damages add up quickly and may bankrupt the supplier. This leaves manufacturers with no ability to recoup their losses.”

“The result is that a single contaminated ingredient may cause damage on a global scale,” added Robert Nevin, vice president at Lexington Insurance Company, an AIG company.

Quality and food safety professionals are able to drive product safety in their own manufacturing operations utilizing processes like kill steps and foreign material detection. But such measures are ineffective against an unexpected contaminant. “Food and beverage manufacturers are constantly challenged to anticipate and foresee unlikely sources of potential contamination leading to product recall,” said Alexandru. “They understandably have more control over their own manufacturing environment but can’t always predict a distant supply chain failure.”

And while companies of various sizes are impacted by a contamination, small to medium size manufacturers are at particular risk. With less of a capital cushion, many of these companies could be forced out of business.

Historically, manufacturing executives were hindered in their risk mitigation efforts by a perceived inability to quantify the exposure. After all, one can’t manage what one can’t measure. But AIG has developed a new approach to calculate the monetary exposure for the individual analysis of the three major elements of a product contamination event: product recall and replacement, restoring a safe manufacturing environment and loss of market. With this more precise cost calculation in hand, risk managers and brokers can pursue more successful risk mitigation and management strategies.


Product Recall and Replacement

Lex_BrandedContentWhether the contamination is a microorganism or an allergen, the immediate steps are always the same. The affected products are identified, recalled and destroyed. New product has to be manufactured and shipped to fill the void created by the recall.

The recall and replacement element can be estimated using company data or models, such as NOVI. Most companies can estimate the maximum amount of product available in the stream of commerce at any point in time. NOVI, a free online tool provided by AIG, estimates the recall exposures associated with a contamination event.


Restore a Safe Manufacturing Environment

Once the recall is underway, concurrent resources are focused on removing the contamination from the manufacturing process, and restarting production.

“Unfortunately, this phase often results in shell-shocked managers,” said Nevin. “Most contingency planning focuses on the costs associated with the recall but fail to adequately plan for cleanup and downtime.”

“The losses associated with this phase can be similar to a fire or other property loss that causes the operation to shut down. The consequential financial loss is the same whether the plant is shut down due to a fire or a pathogen contamination.” added Alexandru. “And then you have to factor in the clean-up costs.”

Lex_BrandedContentLocating the source of pathogen contamination can make disinfecting a plant after a contamination event more difficult. A single microorganism living in a pipe or in a crevice can create an ongoing contamination.

“I have seen microbial contaminations that are more damaging to a company’s finances than if a fire burnt down the entire plant,” observed Alexandru.

Handling an allergen contamination can be more straightforward because it may be restricted to a single batch. That is, unless there is ingredient used across multiple batches and products that contains an unknown allergen, like peanut residual in cumin.

Supply chain investigation and testing associated with identifying a cross-contaminated ingredient is complicated, costly and time consuming. Again, the supplier can be rendered bankrupt leaving them unable to provide financial reimbursement to client manufacturers.

Lex_BrandedContent“Until companies recognize the true magnitude of the financial risk and account for each of three components of a contamination, they can’t effectively protect their balance sheet. Businesses can end up buying too little or no coverage at all, and before they know it, their business is gone.”

— Robert Nevin, vice president at Lexington Insurance, an AIG company


Loss of Market

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While the manufacturer is focused on recall and cleanup, the world of commerce continues without them. Customers shift to new suppliers or brands, often resulting in permanent damage to the manufacturer’s market share.

For manufacturers providing private label products to large retailers or grocers, the loss of a single client can be catastrophic.

“Often the customer will deem continuing the relationship as too risky and will switch to another supplier, or redistribute the business to existing suppliers” said Alexandru. “The manufacturer simply cannot find a replacement client; after all, there are a limited number of national retailers.”

On the consumer front, buyers may decide to switch brands based on the negative publicity or simply shift allegiance to another product. Given the competitiveness of the food business, it’s very difficult and costly to get consumers to come back.

“It’s a sad fact that by the time a manufacturer completes a recall, cleans up the plant and gets the product back on the shelf, some people may be hesitant to buy it.” said Nevin.

A complicating factor not always planned for by small and mid-sized companies, is publicity.

The recent incident surrounding a serious ice cream contamination forced both regulatory agencies and the manufacturer to be aggressive in remedial actions. The details of this incident and other contamination events were swiftly and highly publicized. This can be as damaging as the contamination itself and may exacerbate any or all of the three elements discussed above.


Estimating the Financial Risk May Save Your Company

“In our experience, most companies retain product contamination losses within their own balance sheet.” Nevin said. “But in reality, they rarely do a thorough evaluation of the financial risk and sometimes the company simply cannot absorb the financial consequences of a contamination. Potential for loss is much greater when factoring in all three components of a contamination event.”

This brief video provides a concise overview of the three elements of the product contamination event and the NOVI tool and benefits:

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“Until companies recognize the true magnitude of the financial risk and account for each of three components of a contamination, they can’t effectively protect their balance sheet,” he said. “Businesses can end up buying too little or no coverage at all, and before they know it, their business is gone.”

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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 Lexington Insurance. The editorial staff of Risk & Insurance had no role in its preparation.




Lexington Insurance Company, an AIG Company, is the leading U.S.-based surplus lines insurer.
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