Back to Basics is a weekly feature that highlights important but possibly overlooked information that any EHS professional should know. This week, we examine the ins and outs of workers’ compensation claims.
In your safety and health responsibilities, workers’ compensation claims are the flipside of regulatory compliance. Occupational Safety and Health Administration (OSHA) compliance officers can only inspect a fraction of U.S. workplaces, so you’re far more likely to deal with workers’ compensation claims than an OSHA inspector.
Do you understand the health and safety hazards that can generate the bulk of workers’ compensation claims for medical reimbursements and lost wages?
Every year, insurer Liberty Mutual reports the causes of workplace claims. Its 2024 Workplace Safety Index, which lists the injuries and illnesses responsible for employers’ highest workers’ compensation costs, was topped by overexertion, which is a workplace hazard with no federal standard, followed by falls and being struck by objects or equipment.
The insurer’s Risk Control Services ranked the top 10 causes of workplace claims—causing employees to miss more than five days of work—by their direct medical costs and lost-wage payments. According to Liberty Mutual’s 2024 report, the top 10 causes, costing U.S. businesses a total of $47.93 billion per year, were:
- Overexertion involving outside sources (carrying, holding, lifting, pulling, pushing, or throwing objects);
- Falls on the same level;
- Falls to a lower level;
- Being struck by objects or equipment;
- Other exertions or bodily reactions (awkward postures like bending and twisting, climbing, crawling, kneeling, reaching, sitting, standing, running, and walking);
- Vehicle crashes—roadway incidents involving a motorized land vehicle;
- A slip or trip without a fall;
- Getting caught in or compressed by equipment or objects;
- Striking an object or equipment—hitting equipment or objects in place; and
- Repetitive motions involving microtasks.
Overexertion and back pain
The National Safety Council’s (NSC) recent analysis of Bureau of Labor Statistics (BLS) injury and illness data found that overexertion and bodily reactions generated more than 1 million days away, restricted, or transferred (DART) events from 2021 to 2022, including nearly 700,000 DART cases from overexertion involving outside sources.
According to the Liberty Mutual report, lifting heavy loads, or “overexertion involving outside sources,” costs employers $12.49 billion in medical costs and lost wage payments every year. Back injuries were associated with the highest total costs. Worldwide, back pain is responsible for more years lived with a disability than any other condition.
Know the facts on slips, trips, and falls
According to the NSC, falls on the same level are the fourth leading cause of DART cases—414,400 in 2022. Resulting injuries include soreness or pain (in 26% of incidents); sprains, strains, and tears (24%); bruises and contusions (19%); and fractures (14%).
According to the NSC, 80% of cases occurred in service industries, including healthcare and social services, retail trade, transportation and warehousing, and accommodations and food services. Twenty percent occurred in goods-producing industries, with 13% in manufacturing alone.
The median DART number is 20, and the median number of days away from work is 12.
The NSC emphasizes the importance of effective signage in helping prevent injuries, regulatory violations, and higher insurance premiums.
Floors, surfaces, and walkways are significant sources of nonfatal workplace injuries among retail salespersons, according to the BLS, accounting for 5,170 cases involving days away from work in 2020. The BLS reported 5,630 falls on the same level in the occupation that year.
Workers’ compensation insurer Travelers also compiled data from its claims, producing a workplace injury impact report last summer. In its analysis of claims data, Travelers found that slips, trips, and falls were the second-leading cause of workplace injuries, after overexertion, accounting for 23% of injuries. However, slips, trips, and falls were the leading driver of “severe claims,” or those costing $250,000 or more.
Understanding ModX and your premiums
It’s essential to understand your company’s experience modification factor and how it determines your workers’ compensation premiums.
An experience modification factor may also be referred to as an “Experience Rating,” an “Experience Modification Rate,” an “Emod” or “E-Mod,” an “EXP-Mod” or “E-X-P-mod,” an “EMR,” or a “ModX.”
Besides determining the premium employers pay for workers’ compensation coverage, the experience modification factor can affect an employer’s ability to bid on, win, and retain contracts with the federal and state governments or even private sector projects.
There are a variety of formulas for calculating an experience modification factor, and some are very complex. An insurance agent may be able to share what factors your state’s ratings bureau considers in calculating experience modification factors.
The calculations typically include three years of claims data, usually excluding the most recent year. To determine the pool of comparable companies, the ratings bureau will look at factors like employee occupational classifications (for example, clerical, manufacturing, and managerial occupations), number of employees, and size of payroll.
An experience modification rating of 1.0 means an organization’s workers’ compensation losses align with those of most companies of similar size in the same industry. A rating above 1.0 indicates a company’s losses are higher than expected, and a rating below 1.0 means losses are lower. A favorable rating can result in discounted workers’ compensation insurance premiums.
However, not all employers are large enough to be experience-rated. Such companies aren’t covered by regular workers’ compensation insurance but by an “assigned risk plan, ” which can have higher premiums.
Experience modification factors in contracting
Your experience modification factor may affect your ability to bid on defense or infrastructure projects. Some states won’t accept contractor bids with an experience modification factor higher than 1.0, but some in the insurance industry argue that the experience modification factor isn’t a measure of whether a company is “risky” or “safer.” Virginia enacted a statute forbidding the use of the experience modification factor in its contracting procedures.
Despite arguments that the experience modification factor isn’t a measure of employers’ relative safety, common practice still considers it during contract bidding and procurement.
The Department of Defense (DoD) considers an experience modification rating of 0.7 or lower as “Superior.” A rating of 0.7 to 1.0 is considered “Acceptable,” and a rating greater than 1.0 is considered “Sub-Standard.”
Even some large private sector contracts also weigh experience modification factors in their procurement and contracting decisions.
Claims management
You need to manage your workers’ compensation claims carefully. Accident frequency matters more, but claims totals also matter.
Claims management responsibilities include:
- Establishing steps for gathering critical information and properly filing claims when an injury occurs;
- Communicating with healthcare providers, supervisors, and the worker, as well as the worker’s union if a collective bargaining agreement is in place; and
- Monitoring an injured worker’s needs and progress toward a return to work.
However, the best way to lower your experience rating is to implement an effective safety and health management program. The less frequently your workers are injured, the lower your rating will be. Examining accident, claim, and near-miss data to identify root causes and prevent future accidents can help identify injury trends and prioritize opportunities for improvement.
Return to work and light duty
When one of your employees is away from work following a workplace injury, you want the employee back on the job as soon as possible. That’s when you’ll need a clear, written light-duty and return-to-work policy.
You’ll want a written light-duty and return-to-work policy before you need one. A written policy ensures return-to-work procedures are followed consistently. If light-duty or return-to-work opportunities are offered to some workers but not others, the employer can be exposed to employment discrimination litigation.
A written policy should explain to workers that:
- Being away from work can result in reduced or lost wages.
- Workers may lose their own and their families’ medical coverage once Family and Medical Leave Act (FMLA) leave expires.
- Workers must keep the employer informed of their progress and ability to return to work, and the company may contact them to gather this information.
- The employer will determine how long light-duty assignments are expected to last.
- Being assigned a light-duty job doesn’t constitute a new employment contract between the employee and employer.
Managers developing or reviewing a return-to-work policy must keep several employment laws in mind, like the Americans with Disabilities Act (ADA) and the FMLA, as well as their state’s workers’ compensation laws and any additional state disability or medical leave laws.
Return to work may include light duty, or work responsibilities different from a worker’s regular duties. Return to work also may involve a partial or restricted return to work, or the resumption of a worker’s essential, but not all, regular responsibilities. A partial return to work could also include all of a worker’s regular duties but for a limited number of hours.
Most employers’ workers’ compensation and return-to-work programs include several common elements:
- Steps to follow after an injury has occurred;
- Procedures to follow when communicating with healthcare providers, supervisors, the worker, and the union if a collective bargaining agreement is in place;
- A schedule for monitoring a worker’s needs and progress while away from work;
- Light-duty positions identified before the need arises;
- Handouts about the return-to-work program for use in the new hire onboarding process;
- Videos and other materials produced or acquired regarding accommodation and job modification, rehabilitation, and workplace redesign to clearly communicate return-to-work policies;
- Policies for ensuring light-duty assignments are appropriate for an injured worker’s capabilities and don’t violate any of a physician’s restrictions;
- Procedures for involving the injured worker in identifying suitable light-duty assignments; and
- A schedule for reviewing the entire return-to-work program.
You’ll need to decide which manager at your company is responsible for the return-to-work program, and this manager should then also be authorized to determine light or alternate duties and workplace accommodations for injured workers’ disabilities.
Your return-to-work coordinator should be the primary point of contact for all injured workers. The coordinator should have a thorough knowledge of the ADA, the FMLA, the company’s short-term and long-term disability coverage and disability policies, workers’ compensation law, and the company’s coverage. The coordinator also needs a concrete understanding of the relationships among all these laws and policies.
The coordinator will need access to workers’ medical information and must comply with health information privacy requirements. Despite all precautions, workplace injuries occur, and workers’ compensation claims are filed. You’ll have to deal with workers’ compensation claims far more often than OSHA workplace inspections, so make sure you understand the depth and extent of your responsibilities.