Claim Reporting: The Work Comp Playbook For Employers

The delay in reporting an accident is called lag time, and it is one of the biggest cost drivers in workers’ compensation claims.  Lag time is measured two ways.  The first is employee notification to the employer. This is the number of days between when the incident happens and when the incident is reported by the employee. Consider if an employee is injured on a Friday and waits until Monday to report the claim.  This is only a couple of days but it could mitigate a positive drug test because of the time requirements imposed for a post-accident drug test.  In most jurisdictions, they put a 30-day time limit on the employee to report the claim, but typically the employee will give the supervisor some knowledge of the incident which leads us to the second lag time indicator.  The second indicator measures the number of days it takes the employer to report the incident to the insurance carrier or TPA. It is important to remember that knowledge by a supervisor of an incident constitutes knowledge to the employer. The failure of supervisors to timely report incidents is a huge cost driver in workers’ compensation claims.

The Impact of Late Reporting

  1. Perhaps the most noticeable impact on businesses is financial. As time passes, the costs greatly increase. According to a Summit Holdings study:
    • Claims reported within three days cost on average 15 to 20 percent less than claims reported after three days.
    • The average claim cost increases by 3 percent with each passing day that the report is delayed.
    • Injuries reported two weeks after the incident cost an average of 18 percent more than those reported within the first week.
    • If you wait until weeks 3 and 4 to report, the average cost jumps up an average of 30 percent.
    • Injuries reported a month or more after the incident are an average of 45 percent more costly.
    • Back injuries, in particular, are susceptible to cost increases; their costs increase by an average of 35 percent after the first week.
  2. Another impact is employers lose defenses when a claim is reported late. Consider that most jurisdictions require that the drug/alcohol test be completed the day of the injury. For example, in Georgia, the alcohol screen test must be done within 3 hours of the injury, and the drug test must be down within 8 hours after the injury. Failure to get a timely test can increase costs significantly.
  3. Failure to report the incident timely often means the incident analysis report will be delayed. The best time to get the facts surrounding the incident is to do an incident analysis immediately after the incident.  If the incident reporting is delayed the facts surrounding the incident could be compromised.
  4. OSHA penalizes employers for late reporting. In 2016 OSHA cranked up the fine for failing to report workplace accidents by 400%.  In addition to the mandatory reporting:
    • Report the death of an employee as a result of a work-related incident within eight hours. This applies to fatalities that occur within 30 days of the work-related incident.
    • Report all work-related in-patient hospitalizations of at least one employee within 24 hours.
    • Report all work-related amputations within 24 hours.
    • Report all work-related losses of an eye
    • OSHA also has significantly increased the penalties under the whistleblower protection for employees. If OSHA finds programs in place that pressure employees and supervisors to underreport claims, then they can be extremely punitive.
  5. The delay in reporting could significantly impact the medical treatment plan. First, if the employee is not seeking medical treatment, a small injury could become a large injury. We have all heard about the example where a small cut gets infected, and the claim spirals out of control.  Getting the injured employee first aid and follow-up care whether internally (in the case of a company nurse) or through a medical provider is important.  Secondly, if the jurisdiction allows the employer control over the medical direction, this right could be lost if the claim is not reported in a timely manner.

 

While the financial and legal impacts can be devastating to your business, you shouldn’t disregard the human impacts. If an employee receives an injury or illness as a result of their work, they will want to feel like their needs are being taken seriously and addressed with utmost concern. Make sure to communicate with them throughout the claims process, particularly if they have to take a significant amount of time off of work. This will help them to feel more connected to the company, and it will increase the chances that they will return to work quickly.

Advice for Claim Reporting

There never is an excuse for late reporting of a claim.  Be sure to educate your employees and implement supervisor training program on claims reporting procedures.  As we said earlier, the supervisor’s knowledge of an incident constitutes an employer knowledge.  Review your claims every month and use any lag time issue as a teachable moment to help everyone understand the importance of timely claims reporting.

You also want to make sure that there isn’t any confusion in the reporting process. People may assume that because reporting isn’t specifically in their job description that it is not their duty. If everyone thinks this way, this could result in no one reporting the incident because everyone believes that someone else will do it. Instead, when you create your pre-claim checklist, make sure to specify who should report claims, and plan out the process. If you feel that it is necessary, adjust job descriptions to specifically denote who will be in charge of claim reporting, and always have a backup cross-trained so the incident doesn’t sit on someone’s desk while they are out of work on vacation or medical leave.

 

About Compass RMS

The risk management firm Risk Management, Inc. has specialized in workers’ compensation since 1996, creating the CWCP (Certified Workers’ Compensation Professional) program in 1999 and the P4 process in 2000. We launched our Compass Risk Management platform in 2008 and recently released version 4.0. For more information about our services, give us a call at (770) 534-2042 to speak with one of our consultants.