One-to-one

4 Pages·1991·0.18 MB·English

by  State Compensation Mutual Insurance Fund (Mont.)

368.41 MONTANASTATELIBRARY HY
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"ServingMontana Employers and Employees"
AUGUST 1991 Volume 01 Number01
POLICYHOLDER JAN ri93;WHATIS
NEWSLETTER MONTANA STATE LBSTATE FUND?
1515 E. 6th A\ EE
»FI FNA. MONTANA 59620
Welcome to the State Fund's policyholder newslet- The State Compensation Mutual Insurance Fund
ter and thankyou for taking time to read it. We look (State Fund) is a nonprofit, independentpublic cor-
forward to providingyou with factual, informational poration set upasoneoption whereemployers can
andrelevantarticleson topics which directly affect insure their liabilities under theWorkers' Compen-
you, as abusiness f>erson, andyour employees. sation and Occupational DiseaseActs. The State
We intend to use the newsletter to communicate Fund, as itnow exists, wascreatedby the 1989 Mon-
with our nearly 27,000 policyholders. We plan to tana Legislature.
startwith general articles about the workers' com- The State Fund isgovernedby a BoardofDirec-
pensation system and the State Fund and publish tors. This Boardconsists offivemembersappointed
more specific topics in subsequent issues. Although by the Governor to serve staggered, four-year terms.
notall articles will berelevant toyourbusiness, we The Board hired an Executive Director (President)
hopeyou will find somebeneficial. and has full power and authorityover the State
Our publication schedulecalls for issueson a Fund. They may perform all acts necessary or con-
semi-annual basis. Future issuesofone-to-one venient in the administration ofthe State Fund.
will carry articles on legal issues, legislative action, The State Fund must setrateson an actuarially
ratemaking, return to work ofinjured workers, re- soundbasis to be neither more nor less than self-sup-
habilitation topics, safety and loss prevention efforts. porting. The State Fund must insure all employers
In this issue there are articles on several ofthe who apply for workers' compensation coverage and
above topicsalong with an explanation ofworkers' insures all state agencies.
compensation insurance issues in general and the A number ofpoliciesand procedures havebeen
functionsofthe State Fund in particular. We hope adopted to carryout the responsibilities ofthe stat-
you will find this newsletter useful and to your lik- utes. Theentireoperation hasbeen reorganized to
ing. Please let us know ifyou would like us to in- more closely mirror the functionsand operations of
cludearticleson any topic ofinterest to you. private insurancecarriers.
The Underwriting Departmenthired additional
WHAT WORKERS' staffto allow for more timely and effective handling
IS ofvariouspolicy services functions. Our Safety staff
COMPENSATION?
Continued on Page 3
Workers' compensation is an insurance program Upcoming Articles
designed to paybenefits to workers who are injured
within thecourseand scopeoftheir employment.
The MontanaWorkers' Compensation Act was Medical Cost Containment
passedby thelegislature in 1915. The purposeof
thisAct was and still is to require this type ofinsur- Slips, Slides and Falls
ance coverage for all employeesin Montana. All 50
states and all Canadian provinces have similar laws Policy Classification Process
in place. Thisconceptofinsurance for injured work-
erscame out ofthe Industrial Revolution, the first Employer's Accident Reports
example havingbeen developed in Germany.
Loss Prevention & Control Programs
Continued on Page 2
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WHAT WORKERS' SAFETY CONTROLS COSTS
IS
COMPENSATION?
(continued)
An employer has minimal control over someofthe
Thelegislaturepassed the Occupational Disease factorswhich directly impact the cost ofworkers'
Act in 1959. While theWorkers' Compensation Act compensation insurance. However, employers have
specifiesan injury resulting from a single, identifi- a direct impactbased on their commitment to devel-
able incident, the Occupational DiseaseActdeals op, implement and seriously adhere to loss control
with injuries and illnesses which result from work- programs. In thepast fewyears several industries
related trauma occurringover a period oftime. and many individual employers have successfully im-
Thesetwo Actscombine to ensure that workers plemented safety programs which significantly re-
injured on thejob receive prescribed medical and ducedclaim costs and correspondinglydecreased pre-
lost-timebenefits. It is not the intent ofeither of miums paid by these employers. Ifan employer sig-
theseActsto establish "fault," but to ensurebene- nificantly decreases the losses through safer operat-
fits. Without such legislation, an injuredemployee ing proceduresand effective safety efforts, then pre-
wouldbe forced to seek solutions through thecourt miums can be reduced.
system, which can beextremely timeconsuming and There are three key considerations in anyeffective
often very costly. safety program.
Such insurance programs are also intended to pro-
tect theemployer (policyholder). Generally injured 1. All employeesand supervisors mustbe con-
employees must seek benefits from the employer's vinced that it is "OK" to work safe. This may
workers' compensation policy. This "exclusive reme- sound like a play on words,but itisa most im-
dy" provision protectsemployers from paying unrea- portantconcept in safety. Simply stated,
sonable sumsofmoney based on liability suits. "Whatever the boss wants, thebossgets." If
These programs, in mostcases, protect the employer employees are convinced they are expected to
against tremendous losses. produce high quality products efficientlyand
Though both the Workers' Compensation and Oc- safely, it will happen.
cupational DiseaseActs requireall employers to pro-
vide such insurance protection for their employees, 2. Abusiness needsto follow effectivejob safety
neither ofthem specify where this insurance mustbe procedures. When you are short handed or in a
obtained. The statutes providealternative sources hurry, theonly real protection an employeehas
for coverage. The law refersto alternatives such as is the habitofdoing thejob safely.
Plan Numbers 1, 2 and 3.
Plan Number 1 allows the employer or association 3. Thequality ofproduction and customer service
ofemployersto "selfinsure." In other words, an or- depend on thecaliber ofthe individualyou hire
ganization or association mustprovide all mandated and how well they are trained. Inexf>erienced
benefits to injured workers from their own resourc- employeesare the mostvulnerable to being hurt
es. There area number ofcriterion which an em- because they don't really know what will hurt
ployer or group must meet in order to beeligible to them, plus they are trying to prove whatgood
selfinsure. The DepartmentofLabor and Industry employees they are. This combination produces
approves selfinsurers. many accidents in thefirst six monthsofem-
Plan Number 2 allows the employer to purchase ployment.
workers' compensation insurance from any ofsever-
al-"private" insurance providers. Such privatecarri- The best method ofimproving and maintaining
ers mustmeet all ofthe stipulations oftheapplicable low loss experience is to implement a comprehensive
laws. loss prevention and control program.
Plan Number 3 refers to the State Compensation Thebenefits ofimplementing an effective loss con-
Mutual Insurance Fund (State Fund). Until very re- trol and prevention program are numerousand far
cently, the State Fund was operated by the Workers' outweigh the potential consequences ofnotdoing so.
Compensation Division. Aseparatearticle on the Obviously, doing nothing will result in continued
State Fund is included in this issue. high lossesand high premiums. Thefollowing are
benefits which can be reaped from seriouslosscon-
trol and prevention efforts:
SAFETY CONTROLS COSTS The State Fund's seven safety consultants can
helpbut timedoes not permitdirectcontact with
each and every oneofour 27,000 pxilicyholders. We
intend to include sp)ecific saifety-related 2irticles in
1 . Improved employeemorale. each issueofone-to-one in order to provide at least
2. Reduced accident frequency and injury severity. some assistance to all policyholders. Wehop>eyou
3. Reduced lost timeofemployees. read these articles and receive somepractical safety
4. Reduced down time ofequipment. measures which will benefityour business.
5. Improved productivity.
6. Decreased non-workers' comp)ensation costs. SAFETY PAYS
7. Improved workers' compensation exp>erience
modification factor. WHAT STATE FUND?
8. Decreased or stabilized workers' compensation IS
base premium rates.
(continued)
The followingareactual examples ofbusinesses hasbeen increased to better and more effectively
which implemented a safety program. serve the loss prevention needs ofpolicyholders.
Marketing efforts havebeen develof)ed and imple-
1. A major construction firm with annual payroll mented. The State Fund now providesitsown audit-
ofabout $700,000 decreased liabilities from ac- ing functions.
cidents and injuries from $162,000 in 1986 to Several staffmembers havebeen added to the Ben-
less than $50,000 in 1990. efits Department. Additional claims examiners have
2. Adrilling companywith annual payroll of been hired to assure all required benefits are paid to
$700,000 lowered injury-related costs from injured workersin astimely and effective manner as
$406,000 in 1986 to less than $20,000 in 1990. possible. This action also allows for a more active
3. A steel firm with annual payroll of $1.7 mil- approach in claims management. Rehabilitation co-
lion had liabilities from work-related injuries ordinatorshavebeen added to the Benefits Depart-
of$218,000 in 1986 andjust over $13,000 in mentto ensure proper and quality rehabilitation ser-
1990. vicesare provided within variouscostcontainment
4. A major nursing home facility with annual guidelines.
payroll of $1.2 million dropped liabilities from All in all, weat the State Fund view the future in
$270,000 in 1986 to $62,000 in 1990. a mostpositive light. Every effort will be put forth
5. A large printing company with annual payroll to ensure the highestquality ofservicesare provided
of$1.4 million lowered work-related injury lia- to policyholdersetndclaimants at the lowest possible
bilities from over $120,000 in 1986 tojust over cost.
$10,000 in 1990.
one-to-one
These seem likevery large decreases in costs relat-
ed to workers' comf>ensation insurance, but they are
actual figures from our records. Theseare definitely
not uniquecircumstances. Many large and small TheStateFundNHie>to>oa«^iBanofficialpolicyholdernewsletter
policyholders with effective loss prevention programs pkuebelpiSsthaetdebFyutnhdepSotlaitceyChoolmdpeernssiantfioornmeMdutounalthIenwsourrkaenrcse*Fcuonmdpetnoseadtuicoanteand
have seen similar liability decreases in recentyears. industryandtheStateFund.
Managementcommitment is the most critical ele- Editor JimMurphy, ExecutiveVicePresident
ment ofan effective loss prevention and safety con- ManagingEditor HaroldGilbert»on,AdministrativeOfficer111
trol program. But, as the above examples show, the ProductionEditor PietrZwolle,ManagementAnalyst
time and efibrt is well spent resulting in considerable
savings for the companies. PrintedbyArtcraftPrinters,Inc^Bozeman.MT50715.
In addition to management'scommitment, there Printinganddistributioncostsforthispublicdocumentareavailablefromthe
ProductionEditor,ManagementInformationServices,ExecutiveOffice,State
are many other elements to a successful program, in- Fund.P.O.Box4750,Helena.MT 59604-4759.
cluding prof)er policiesand procedures, safety com-
mittees, safety meetings and training, identification PRINTEDON
and analysis ofhazards, and accident investigation, RECYCLEDPAPER
just to mention a few. The employer must attempt
to incorporate as many elements as possible to re- © MONTANA STATE FUND 1991.
duce the frequencyand severity ofinjuries.
Allrightsreserved;reproductioninpartorinwholewithoutpermissionisprohibited.
LEGISLATIVE UPDATE
Thefollowing isa briefsummaryofsomeofthe HB 197 Codifiesa Supreme Court decision which
legislation which primarily impacts the State Fund. states, "The courtcan impose a 20% penalty for un-
reasonabledelaysor refusal to pay after thecourt
Senate Bills hasordered the paymentor after the insurer agrees
to pay."
SB 102 Workers' comp>ensation insurancecover- HB251 Extends the legislativeWorkers' Com-
agefor Volunteer Firefighters. pensation Joint Select Committee until June30,
SB 130 Insurer is only liable for the paymentof 1993.
genericdrugsunless the physician specifies no sub- HB280 Temporary total benefitscan bedeniedif
stitutionsor ageneric drug is not available. thetreating physician releases the worker to the
SB 188 Addsacupuncturists to the listofmedical same, modified, or an alternative position for which
providers. Theinjured worker has initial freedom of theworker isqualified, with the sameemployer, at
choice in the selection ofmedical providers. the same or higher wages and the worker does not
SB383 Definestemporary servicecontractor, accept said offer.
temp>orary worker and the motor carrier responsible HB 465 Generally revisesand clarifies the regu-
for coverage ofdriver(s). Italso clarifies the subro- latory and administrative functionsofthe workers'
gation section ofthe statuteand repeals the conflict- compensation system.
ing 20-daycancellation notice previously in the law HB807 Clarifies workers' compensation and un-
and clearlydefines the required 30-day cancellation employment insurance listsofexempted employ-
ments.
notice.
SB420 Statesthe insurance carriers and the HB812 Allows the DepartmentofLabor and In-
State Fund mustoffer insureds a deductible program dustry to adopt rules to determine theemployee'sex-
for medical, hospital and related services in the pense reimbursementswhich will be excluded from
amountof$500 per claim. "wages" for both workers' compensation and unem-
SB 473 Provides for workers' compensation in- ployment purposes.
surancecoverage for somecommunity service work- HB 837 Revises definitionsofpermanent partial
ers. and permanent total disabilities, redefines rehabili-
tation, repealsrehab panelsand impacts many other
House Bills areas ofworkers' compensation.
HB 995 Grants Board ofInvestments authority
to sell up to $220,000,000 in bonds to pay for claims
HB 187 The insurancecarrier mustadopta for injuries resulting from accidents which occurred
method ofcalculating premium paidby the construc- beforeJuly 1, 1990 and allows for lump-sum settle-
tion industry which does not impose a higher insur- mentofa claim regardless ofthe lump-sum law in ef-
ancepremium solelybecause an employer pays a fectat thetimeofinjury.
higher wage.
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