The cost of a workers’ compensation claim can skyrocket with both direct and indirect costs related to an injury adding up quickly. Direct costs are well known and include indemnity (lost wage) benefits and medical benefits. But the indirect costs associated with workers’ compensation claims can build up even more – potentially three to five times the total of direct claim costs. Indirect costs are not typically covered by insurance, yet can have a significant impact on municipal departmental budgets.
Indirect costs can include overtime salaries (for other employees covering the work of the injured employee); reduced productivity; hiring/training costs; and managers/supervisors being pulled in to cover work and thus losing time from their administrative duties. “It’s not just the cost of having someone out and on workers’ comp and running up premiums,” said Judith Perkins, Human Resources Director in Reading, MA. “Loss of efficiencies and loss of productivity are also concerns. And, it can put others at risk when someone has to cover or do the work of two people – particularly with physical jobs like in Public Works.”
In the past, municipal governments may have refrained from implementing “return-to-work” programs – which are prevalent in the private sector – because of challenges related to collective bargaining agreements. Today however, some communities are beginning to implement successful programs to help manage and reduce workers’ comp costs. And, while a formal initiative is recommended, informal return-to- work programs can also deal with situations on a case by case basis.
A return-to-work program is designed to return injured employees to the workplace as soon as it is medically reasonable to do so, even if it’s initially at a limited capacity. It also accelerates the reintegration of injured employees into a full performance mode and allows them to achieve quality and productive goals. Some injuries will preclude the return of an employee to any active work but the majority of injuries sustained by municipal employees are not serious or life threatening. In these cases, a return-to-work program is designed to break the typical employee disability cycle.
Why Return to Work?
According to statistics, 50 percent of injured employees do not return to work once they have been out of work for more than six months. Transitional duty helps retain productive employees while controlling and reducing workers compensation costs. It also improves employee morale as the injured employee feels positive about their contributions while they continue to rehabilitate. Everyone benefits from balancing quality medical care and transitional duty based on the treating provider’s recommendations.
In Reading, Perkins said in the event an injury occurs, the town works closely with its occupational health provider to determine what the best treatment is. “We want to make sure people do not come back too soon,” she said. “We want to make sure they are fully 100% -- unless we have a light duty situation for them.” Having a good relationship and keeping open communication with the provider is key, she said.
Many municipalities have policies restricting employees from returning to work unless they have a “full duty release” from their treating physician. Despite informal efforts by some to bring injured employees back to work on a modified basis, most managers and supervisors still tend to follow the established policy as a safe course of action.
Such practices, however, can enable injured employees to tell their treating physician that there is no modified work available and that a full duty release is required. Without any guidelines from the employer, the physician is dependent on the injured worker’s explanation of tasks available in the workplace. With no formal communication between the treating physician and the employer, and no modified job descriptions, the employee is often allowed to stay home and collect indemnity benefits, netting approximately the same income as when they were active.
When properly incorporated into policy and practice, return-to-work programs have proven successful in reducing the indemnity and medical costs of a workers’ compensation claim. According to the U.S. Department of Labor, more than half of return-to-work accommodations cost the employer nothing, and 74 percent of employers who implemented accommodations rate them as either “very effective” or extremely effective.” A study by the American Society of Safety Engineers showed a “significant cost savings opportunity” with return-to-work programs – with a possible return on investment of $8-10 for every dollar spent on implementing one. These programs have markedly reduced total workers’ compensation indemnity costs while also reducing medical and rehabilitation expenses, as well as lost workdays.
Typically, when an injury occurs the employee seeks medical care from a physician, who determines the extent of the injury. If this treating physician determines that the injury is not serious enough to categorize the injured worker as permanently or totally disabled, the physician may write a “partial release” specifying the limitations under which the employee may return to work. Job duties should not be left to the employee’s verbal description. Instead, the employer should communicate the exact nature of the job to the physician with a detailed description of the specific job duties.
Ensuring Program Success
For any program to be successful, employees must be completely informed of management’s concern for their welfare before an injury occurs. Most importantly, employees should be provided with instructions indicating how and when to report an injury. They should also understand that a return-to-work program is in place as a part of their employee benefits.
An effective return-to-work program requires a set of policies and procedures that facilitates post-injury management during every step of rehabilitation, and includes the following steps:
MIIA distributes a “Return-to-Work Policy Manual” and works with members eager to implement a return-to-work program. Although we encourage members to consider a formal initiative, 46 MIIA members have successfully utilized an informal return-to-work program over the past 18 months at least once – thus decreasing the exposures of these claims.
Most importantly, to minimize workers’ compensation claims exposure, immediately report all claims to MIIA or your insurance provider – and your adjuster will keep you involved in the disability and medical management of the claim. Consider flexible and creative transitional duty alternatives to reduce the potential for litigation and reduce the cost of the claim.