James F. Mahoney, Attorney

Top 10 Ways to Reduce Your Compensation E-Mod

The “experience modification factor” looks at the cost of your workers’ compensation claims over a previous three-year period and compares it to similar industries

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  1. Institute a strong return to work program appropriate for employees’ limited physical work abilities that returns workers early, and is coordinated with their benefits. Line managers must see the benefits of finding light duty assignments and be held accountable.

  2. Conduct pre-employment, post accident and random drug testing. Every company should have a zero tolerance policy in place. Your employee or driver handbook must reflect this policy in detail.

  3. Adhere to the robust safety program detailed in the FMCSR’s. Strictly observing the regs will reduce both Comp and liability events, and has the added benefit of limiting CSA
    interventions. Safety programs should be more than a slogan on a website. No program is effective unless senior management looks at addressing root causes instead of just hoping an accident doesn’t happen again. The revenue will be there; it’s how much of it you keep that counts.

  4. Verify the accuracy of the e-mod computation. Mistakes are very common. Challenge your broker or risk manager to do the math and analyze the conclusions.

  5. Report and manage claims promptly and properly. Utilize a person or vendor with experience in claims handling; don’t just delegate these important oversight duties to an HR rep or your Safety Department. A strong advocate who has been a Comp adjuster or Comp lawyer can ride herd on your claims saving real money.

  6. Carry a large deductible and self-pay smaller claims. You should only do this if you’re committed to have experienced personnel seriously oversee your insurer's handling of claims. Large deductible policies can come calling year after year with surprise invoices. Insurers return collateral similar to polar bears giving up seal meat. These policies look attractive for the low cash outlay at inception, but you'll be financing old claims for years. And insurers have no sympathy. Watch out for insurers selling "captive pools" where you are joined with others whose losses are uncontrolled.

  7. Review claims with the insurance adjusters on a regular basis for all new claims and those over a specific reserve threshold (e.g., claims with incurred reserves greater than $10,000). If your premium is large enough, and your risk manager strong enough, you should enter into a policy by insisting on certain additional service requirements.

  8. Be aware of job tasks that seem to repeatedly cause injuries; change the nature of these tasks. Fall downs while entering or exiting trucks are more common now with aerodynamic truck designs. Safety managers can enforce three point contact and the use of work shoes, etc.

  9. Publish your e-mod to your line managers and hold them accountable for losses and
    incent them for safe operations. Management is typically only concerned with operational efficiencies and gross revenues. They don’t often see the true cost of a loss because it may not show up for years. Internally minimizing loss exposures in reporting to senior management will hide the cost for now – until the loss shows up years later with a giant reserve. By then the line manager has already spent his performance bonus and also may be retired. Good risk control behavior takes years to show up. So does bad risk control.

  10. Announce a companywide rewards program for all employees and management based on individual and total reduced claim frequency. We all remember the signs posted at factories that touted, “This facility has gone __ days without a lost time injury.” That worked then and still works now.