12/10/2013

Uniting Interests

Gaining union cooperation could help bolster workers’ comp claims management.

By Sam Friedman

Under the best of circumstances, workers’ compensation claims management often can become adversarial if mutual trust and cooperation are lacking between employer and employee. Adding union representation to the mix can complicate matters even further and raise the tension level.

But it doesn’t have to be that way. Indeed, unions could be ideal partners in claims management because the interests of workers, employers, and comp insurers are in many ways aligned. No one wants to see employees hurt on the job. And if someone is unfortunately injured, getting them treated properly (as both patients and claimants) and back to work should be a priority goal for all parties.

However, I’m certainly not wearing rose-colored glasses here. I realize that leveraging a union relationship to improve the workers’ compensation claims experience might be challenging, particularly if there is labor unrest over more fundamental issues. But the potential benefits to everyone involved make it worth the effort to at least try, in my humble opinion.

In my May 2012 column, “Why Keep Workers in the Dark About Comp Claims Management?” I argued that a dearth of basic knowledge among employees about this standard coverage and a counterproductive tendency by some employers to keep workers’ comp a mystery may inhibit effective claims management. In other words, what workers don’t know about comp can hurt them—as well as their employers and insurers.

Back then, a few readers pointed out that I had neglected to address the particular obstacles facing employers with unionized shops, which prompted me to think about possible opportunities to create a more engaged and effective workers’ compensation claims system by working in tandem with organized labor.

Securing a partnership on workers’ compensation may be easier said than done. At their worst, unions and employers can be natural enemies, facing off in a winner-take-all battle over limited resources and conflicting priorities. But when it comes to employee safety, injury treatment, and return-to-work efforts, unions and employers could just as likely be natural allies. The key is to get past any history of confrontation and find common ground where the needs of both labor and management are recognized, respected, and reasonably addressed.

What factors might prevent unions and employers from coming to a meeting of the minds on workers’ compensation claims management?

If a labor/management relationship is adversarial rather than collaborative, mutual mistrust between the union (and, by extension, individual workers) and the employer (and, by extension, its workers’ compensation insurer) is likely to prevail. Programs that refer injured workers to medical providers in a network put together by the employer or carrier may be missing. Back-to-work programs might be restricted or absent altogether. And one might expect a greater likelihood of litigation over workers’ compensation claims initiated by union counsel. The result of such a poor relationship and lack of cooperation is likely to be higher frequency and severity of workers’ compensation claims, both for medical care and indemnity costs.

So how might a more cooperative relationship be forged that provides a healthier environment for workers’ compensation claims management?

As I noted in my earlier column, the employer can start by working closely with the union to make sure employees are aware of workers’ compensation, including how to navigate the claims process. I’ve argued in the past that workers’ compensation could, and perhaps should, be presented to workers as an employee benefit. Yes, in most states, workers’ compensation is a mandatory coverage, but that doesn’t mean it’s any less valuable to workers who are hurt or become ill due to a work-related accident or condition.

Being open and honest with employees about their benefits, as well as their responsibilities, under workers’ compensation could go a long way toward building the necessary trust to improve the claims experience, both literally in terms of how people are treated as well as financially in terms of lowering frequency and severity results.

To accomplish this, an employer needs to establish direct lines of communication—not just with the union, but with rank-and-file workers. Safety committees are a good start, along with a program to make employees more aware of the risks they face. A hotline, intranet site, or even a mobile app could be created to help alert management and union leaders to potentially hazardous conditions. (It also must be made clear that whistleblowers will be protected. If they see something, they should be encouraged to say something when it comes to safety hazards.)

Working in conjunction with a union to establish a robust wellness initiative also might enhance loss control cooperation and improve claims experience by helping mitigate contributory factors such as obesity, diabetes, and high blood pressure.

Return-to-work programs also could be negotiated that not only allow but also encourage those hurt on the job to get back as soon as they are able, even if that means job modifications or temporarily taking on a different role entirely.

Ergonomic initiatives, safety upgrades, and rewards for spotting and getting potential hazards eliminated are additional elements that could help build trust to negotiate the tougher issues, such as employee rights in a fraud investigation, as well as penalties for being dishonest on a claims filing.

Employers also might seal the deal by making sure workers benefit from these changes—not only in terms of fewer injuries, an easier claims process, and a healthier life but also in their paychecks. Once savings from such joint efforts are verified, a prime motivator to cooperate might be setting aside an agreed-upon percentage of that money to reinvest in bonuses or raises.

The essential element throughout is good faith. The employer’s offer of an olive branch must be genuine. Workers who file claims should be treated with respect and dignity, even during fraud investigations. Most probably just want to be given the benefit of the doubt if they file a claim, as well as a fair and transparent appeals process to settle any disputes.

The result of such joint claims management efforts with unions is likely to be a win-win. Employees may end up safer, healthier, and happier in general. The injured may be more likely to get effective treatment and go back to work faster. The employer and insurer hopefully will see lower claims costs and a more productive work force.

Looking at the bigger picture, a workers’ compensation claims management partnership might even form the basis for a more trusting relationship with labor that could very well pay dividends in other areas where cooperation rather than confrontation makes more sense for both sides.

In any case, it’s certainly worth a try. After all, what have employers got to lose by reaching out to labor unions in an effort to keep their members safer, healthier, more informed, and better treated?   



Sam Friedman is insurance research leader with Deloitte’s Center for Financial Services in New York. He has been a Fellow with CLM since 2011, and can be reached at samfriedman@deloitte.com.

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