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Workers' comp dominates discussion.

At the same time that RIMS conference registrants were in seminars debating the state of the U.S. workers' compensation system, almost 1,000 business representatives were participating in a daylong, Texas-wide teleconference on recent changes to that state's workers' compensation laws. just two days earlier, RIMS bestowed an award upon its four Texas chapters for their work on behalf of reforming those laws.

Undisputedly workers' compensation is one of the hottest insurance topics facing American businesses today, and this year's conference surely reflected that trend. In fact, RIMS issued almost 1,300 tickets to seven workers' comp seminars, several offered twice. Everything from how to reform the system to improving claims management to preventing back injuries to rehabilitating injured workers and returning them to work was explored. In the end conferees left Boston with a lot of thoughts, many clouded by questions.

"Today we find ourselves in the biggest crisis since the federal products liability crisis," said Michael McDonald, group director of risk management for Ryder System Inc.

"The cost of workers' compensation is likely to be the number one item on the risk manager's agenda for the coming year," explained Stephanie Craig, insurance manager of Grossman's Inc. "Rate increases averaged 6 percent last year countrywide, and this year's proposals average 15 percent. Many states, however, are experiencing the second or third year in a row of 15 percent to 30 percent increases."

Opening a unique, highly interactive roundtable session on the subject, Mr. McDonald hypothesized that "What we really need in this country to solve the workers' comp crisis is a federal workers' compensation act."

Through a federal act, benefits can be leveled, Mr. McDonald said. "Benefit levels from state to state are inconsistent," he said, explaining that in some states benefits are half as much as in others. A federal act could also create a medical fee schedule and a pool of qualified workers' comp judges, he said.

Most of the panelists and members of the audience, however, quickly attacked Mr. McDonald's hypothesis. "I don't think it will ever happen," retorted Susan Drake, Ryder's senior manager of workers' compensation. "The states want to do their own thing."

"I have yet to see federalization work in any part of the economy," followed Robert Booher, senior vice president at Marsh & McLennan. There's as much abuse in federal programs as there is in their state counterparts, he said. Besides, each state has a different economy and employment patterns, making standard benefit levels impossible, he added. If anything, a federal benefit would drive workers' comp costs higher because it would have to equal the highest current state benefit, noted Fred Kist, a principal at Coopers & Lybrand. To do so otherwise would be politically disastrous for legislators, he said.

"Workers' compensation is a very significant coverage for many companies," said Mr. Kist. "Something needs to be done on a national basis, not a federal one." Speakers during other sessions also addressed the reform issue. In a forum on workers' comp claims, Massachusetts defense attorney Paul Goodrich of Morrison, Mahoney & Miller said the adversarial relationship between employer and employee must be removed from the system. "We've got to share the blame," he said.

Mr. Goodrich suggested that impartial physicians, assigned by judges or regulators, examine injured workers, and that a mandatory fee schedule be imposed.

A member of the audience said New York uses such a system, but "it does not work." The system is hampered by tremendous backlogs and doctors who are not trained in comp cases, she said.

Another panelist, Gene Netze, risk management administrator for the Electric Boat Division of General Dynamics, said prevention, particularly through better enforcement of OSHA laws, is key to improving the workers' comp dilemma. He also suggested that trained employees who do not follow proper safety rules should be held responsible for a deductible when they are injured. That idea clearly did not go over well. "It will never came about," shouted one attendee. "That goes against the whole idea of workers' compensation. It's almost like going back to the 1890s," said another.

Eliminate Fraud

One way to improve the system, according to several speakers, does not involve reform but catching the crooks. The system, they believe, is loaded with fraud, although no one could say precisely how much.

Ms. Drake tried to quantify the problem. Based on the opinions of Ryder's 47 claims people, she said, "Five percent of our cases are fraudulent on receipt." Another 50 percent later become fraudulent as injured employees maneuver to stay out of work longer than necessary.

"We've all committed fraud in our lives," explained roundtable participant Mark Carter, director of corporate insurance for The LTV Corp. If an attorney or union official asks you, "'Have you ever been ill or injured and can it possibly have happened on the job?,' do you think you would file a claim?"

While the causes of fraud are more obvious, detecting and proving it can be difficult. "Even if you identify it as a groundless claim, how do you defeat it?" asked Mr. Booher. Not only is it difficult to ascertain whether some injuries are job-related, evidence supporting certain claims, particularly those related to stress, are often not visible.

Stress claims are the number one occupational illness in California, according to Mr. Booher, who added that press coverage and lawyer advertisements are causing increases of such claims in other jurisdictions. "Once one of these cases is established the chances of it spreading are extremely high," he said.

Policy and Communication Many fraudulent claims and injury lawsuits, speakers agreed, are the result of companies not treating their employees properly before and after injuries occur.

"A lot of mistakes occur even before an accident happens," said Massachusetts plaintiff attorney Alan Pierce, a partner in Pierce, Schneider and Ricci. He explained that employers should create and communicate a policy stating that injured workers can come back to modified jobs. One company, Dennison Manufacturing Co., for example, offers its employees 100 percent of wages when they return to a modified position. "We found they were pretty receptive to return to work," said its risk manager, Missy Quay. "If you handle it right, you'll even see people come back to work four weeks earlier than anticipated," concluded Mark Noonan, an attorney and assistant vice president for Johnson & Higgins of Massachusetts.
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Title Annotation:RIMS conference
Author:Schussel, Mark L.
Publication:Risk Management
Date:Jun 1, 1990
Words:1054
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