"If you spend enough time on a claim, you'll see things you don't normally see." That's the overriding message from the risk manager of one of the world's leading staffing companies for employers looking to reduce their workers' comp costs.
The privately owned company has seen savings upward of $300 million in its workers' comp program over the last seven years.
"The vast majority [of employers] are doing many of the things we do. The biggest difference is we just simply go further," said Fred O. Pachon. As vice president of risk management and insurance, general manager, Tradeforce Division for the Santa Barbara-based company, Pachon uses an 11-point system to reduce workers' comp expenditures.
These are what he calls the 11 great habits that form the fundamentals of success:
- Have command of the data.
- Challenge the system, the law, the status quo. Ask why.
- Set goals -- benchmarks for adjusters, investigators, and attorneys.
- Put a price tag on every new claim -- begin with the end in mind.
- Complete the investigation of claims within 72 hours.
- Question the mechanics of injury -- does it really make sense?
- Don't give the legal causation decision to the doctors.
- Look for ways to deny claim vs. looking for ways to qualify claims.
- Make decisions on your cases within seven days not 90 days.
- Settle cases within 90 to 180 days not two to three years.
- Set the tone of the claim. Tell the injured worker what to expect -- communication is key.
The process begins with a thorough investigation of the claimant. Rather than a simple index search, Select does six background searches -- to get a clearer picture of the person's character, including any history of fraud or crimes. "We also run a Social Security check," Pachon said. "Often we find the Social Security number doesn't belong to the claimant, [but] it belongs to someone who died a year ago."
Pachon says their next step is to talk to the witnesses and find out if they are "real." "We push very hard and say, 'Sir, did you actually see it with your own eyes?' When you push hard enough often they'll say, 'No, I found him on the floor.' At that point it disqualifies the eyewitness."
The final part of the investigation is a two-phase interview of the claimant. In the first phase, Pachon said they ask for the basic details about the injury. The second phase is more confrontational, when they present facts, such as witnesses who did not actually see the accident happen. "A great number of claimants -- more than a third -- drop their claim at that moment," he said.
For claims deemed legitimate, Pachon said they resolve them as quickly as possible. That includes telling the injured worker exactly what to expect and the estimated recovery time based on scientific evidence.
As the nation's ninth largest staffing company with an estimated $1.7 billion in sales, Select can afford to employ three paralegal adjusters inside the insurance company it uses to make sure everything runs perfectly. But Pachon said there are things smaller companies can do, too.
He recommends investing in safety training and partnering with a good broker that will offer some good claim consultancy. First and foremost, though, he said to keep digging for facts about the claim.
"Investigate very thoroughly," he said. "Don't let go of the claim until it makes total sense to you."
Read more at the WorkersComp Forum homepage.
October 19, 2010
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