Why You Need ‘Key Man’ Insurance

board meeting

If you are operating a small business, you are likely relying on a small crew to get the job done.

Many employees in small firms have to wear several hats and, if one of them or an owner should die, the business could suffer greatly from that sudden loss of talent or one of the owners who is integral to the operations.

If you don’t have “key man” insurance, that setback could be devastating to the viability of your operations, whereas coverage would provide you with extra funding that you would need while recovering from the loss.

Key man insurance is simply life insurance on the key person in a business. In a small business, this is usually the owner, the founders or perhaps a key employee or two. These are the people who are crucial to a business ― the ones whose absence would sink the company. You need key man insurance on those people.

Key man insurance basics

Before purchasing coverage, give some thought to the effects on your company of possibly losing certain partners or employees.

In opting for this type of coverage, your company would take out life insurance on the key individuals, pay the premiums and designate itself as the beneficiary of the policy. If that person unexpectedly dies, the company receives the claim payout.

This payout would essentially allow your business to stay afloat as you recover from the sudden loss of that employee or partner, without whom it would be difficult to keep the business operating in the short term.

Your company can use the insurance proceeds for expenses until it can find a replacement person, or, if necessary, pay off debts, distribute money to investors, pay severance to employees and close the business down in an orderly manner.

In other words, in the aftermath of this tragedy, the insurance would give you more options than immediate bankruptcy.

Determining whom to cover

Ask yourself: Who is irreplaceable in the short term?

In many small businesses, it is the founder who holds the company together ― he or she may keep the books, manage the employees, handle the key customers, and so on. If that person is gone, the business pretty much stops.

Determining the amount of coverage

  • The amount of coverage depends on your business and revenue.
  • Think of how much money your business would need to survive until it could replace the key person, come up to speed and get the business back on its feet.
  • Buy a policy that fits into your budget and will address your short-term cash needs in case of tragedy.
  • Ask us to get some quotes from different insurers.
  • Check rates for different levels of coverage ($100,000, $500,000, etc.)

Tips for Successful Telecommuting During Outbreak

telecommute

As the coronavirus spread ramps up and more people are being asked to self-isolate, many employers are scrambling to put systems in place to allow their employees to telecommute.

Many companies are not set up for telecommuting arrangements, and they have legitimate concerns about productivity, communications ― and even the possibility of workers’ comp claims stemming from home hazards that may not be typical in the workplace.

But there are steps you can take to make sure that you keep your employees engaged and on task.

1. Make sure they have the right technology

If you don’t already have one, you may want to consider setting up a company VPN so your employees can access their company e-mail and databases. Any employee working from home should also be provided with a company laptop and make sure that they have an internet connection that is fast enough to handle their workload.

Also provide an infrastructure for them to be able to work together on files. If they are not sensitive company documents, they can use Dropbox or Google Documents.

These services allow multiple editors to view and update documents simultaneously, from remote locations. This ability to check up on your employees’ work helps keep them honest. Plus, a centralized online location for shared work files minimizes the likelihood that important files will be accidentally lost or deleted.

2. Provide clear instructions

It’s extremely important that you provide clear instructions to remote workers. Some people do not perform well without direct oversight and human interaction. Without that factor, you will need to spell out your expectations and the parameters of the project they are working on in detail.

Make it clear that if they are confused or unsure about any part of the work, they should contact a supervisor for clarification. If you can eliminate misunderstandings, then your workers can be more efficient.

3. Schedule regular check-ins

To hold your employees accountable for being on the clock, schedule calls or virtual meetings at regular intervals. Even regular instant messaging works. Use these meetings to allow them to update their superiors on their work. This also helps with productivity, since there are consequences for failing to meet expectations and showing up to the meeting empty-handed.

Their supervisors should be working when they are, so they can be in regular communication. If your employees know when their supervisors are working, and vice versa, then you also create a collaborative environment where they can ask and answer questions and provide input.

4. Keep employees engaged, feeling part of the team

One of the hardest parts of working from home is the feelings of isolation and detachment from colleagues. It’s important that you build in interactive time for your workers.

One way to do that is by using a chat program like Slack, Hangouts or WhatsApp (which has a group chat function). For remote workers, these programs are a blessing because they make it easy to keep in touch with their colleagues in and out of the office ― and they level the playing field, so to speak, by making distance a non-issue.

You can also encourage your staff to collaborate and use Skype, Facetime or Google Hangouts to video chat. Using video services creates a distinctly more intimate and real-feeling work environment for both parties.

5. Cyber protection

With more employees working from home, you also increase your cyber risk exposure, especially if they are using a company computer that is tapped into your firm’s database or cloud.

You should impress upon your employees the need to follow cyber protection best practices, such as:

  • Not clicking on suspicious links in e-mails from unknown senders.
  • Making sure that their systems have the latest security updates and patches.
  • Backing up their data daily.
  • Training them on phishing, ransomware and malware scams, especially new ones that try to take advantage of people’s fears about COVID-19.

The takeaway

If you’ve not had staff telecommuting in the past or are asking many employees who never have worked in that way to telecommute, there will be some growing pains as you work out the kinks.

But if you follow the above tips, it will make the transition easier and less painful for your workers, their managers and the organization as a whole.

Coronavirus Could Trigger Multiple Insurance Policies

coronavirus mask

COVID-19 is forcing businesses to face a number of risks, liability and insurance implications.

Companies could seek coverage for a variety of claims stemming from the outbreak, including workers’ compensation, business interruption, liability and more.

And, now that it is a pandemic, the economic fallout may be expansive — hitting your company’s operations in the form of lower sales or supply chain disruptions.

Now is a good time to understand which of your insurance policies could come into play.

Workers’ compensation

Workers’ compensation policies generally extend insurance benefits to employees for injuries and illnesses “arising out of or in the course of employment.”

That wording makes it difficult for most workers to file a claim if they suspect that they got the coronavirus at work, presumably from another employee, customer or visitor to the workplace. But if an employer knows that the virus is in the workplace, coverage could apply.

Workers’ compensation could come into play in the following instances:

  • Health care personnel who work where there are patients being treated and tested for COVID-19 would have a strong claim if they contracted the virus.
  • Employees who travel overseas for business and contract the illness.
  • Employees who are exposed to the illness at work by an infected co-worker.
  • Employees who are assigned to work in a location with infected parties.

However, workers’ comp insurance would likely not cover employees who are working on assignments abroad for more than a short time.

Business interruption

One major fallout from the spread of COVID-19 is that it has cut into global supply chains, forcing manufacturers around the world to suspend production. This has been especially true for companies that rely on China for their parts and materials.

But now that the virus has exploded in a number of countries, the threat to supply chains will only increase. This has already started affecting companies in the United States. If your company’s operations are affected or stopped due to the virus, you may be wondering if the business interruption coverage in your property policy or business owner policy may payout.

Business interruption coverage replaces income that was lost due to a disaster, such as a fire on the premises of the company or one of its suppliers, or a hurricane that hinders a company from operating.

However, any hit to your income from coronavirus would not be physical damage, which is a prerequisite for this coverage. Viruses and disease are typically not an insured peril unless added by endorsement. In many cases, the policy may specifically exclude coverage for viruses and diseases.

There is potential coverage through communicable disease coverage under proprietary insurance carrier forms if the insured is closed by a “public health authority” order for closure, decontamination, etc. But it’s worth noting that these usually require the order to happen, so the insured cannot voluntarily decide to close and then claim coverage.

General liability

In terms of liability, a third party — customer, vendor or guest — could claim they were sickened on your property and sue your business for negligence for failing to provide a clean facility, which could trigger your commercial general liability policy.

Any company that deals with the public or customers, like a retailer, restaurant, hotel, daycare center or gym, would be at greatest risk for this type of action.

While the chances of them winning such a case would be small, you could still face legal bills, which your CGL policy would typically cover. If there is coverage, it would come under the policy’s “bodily injury” portion.

Some CGL policies exclude claims arising from a pandemic, virus or bacteria, so read your policy carefully. Many insurers also include broadly worded pollution exclusions that could preclude or limit coverage.

Business travel accident insurance

This insurance could cover employees who travel on business domestically or internationally, foreign employees of U.S.-based businesses and U.S. employees on offshore assignments. The insurance provides:

  • Traditional accidental death & dismemberment coverage.
  • Emergency evacuation, repatriation, and out-of-country medical benefits that cover costs for the treatment and transportation of sick or injured employees.
  • Optional coverage for unexpected medical expenses.

Train Your Workers in COVID-19 Prevention

coronavirus covid-19

As the COVID-19 virus spreads across the world and the number of cases growing in the U.S., there is a lot of hysteria and misinformation about how to protect yourself from this new virus strain.

More and more people are wearing surgical masks when they go outside, thinking it will protect them, and some people have stopped drinking Corona beer because the virus is a coronavirus. This has left plenty of people not sure what they can do to avoid catching it themselves. There are also obvious concerns about workplaces as the virus spreads some employees may be afraid to come to work.

You should consider talking to your staff about how to protect themselves and consider holding a meeting to go over the main points they should follow. To help, we’ve compiled best practices information from the Centers for Disease Control and the World Health Organization to provide you with unfiltered advice so you can protect yourself and your family:

What should I do to protect myself and others?

The most common way for this disease to spread is from a person touching a surface that has been infected through a sneeze or cough from a carrier. And then the person touches their eye, nose or mouth. That’s all it takes.

  • Be mindful of what you touch all day. If you press elevator or ATM buttons, use a knuckle instead of a fingertip, while on escalators or stairs try to avoid touching the handrail.
  • Avoid touching eyes, nose and mouth and if you have touched something in public, do not touch your face at any time until you have a chance to wash your hands or use hand sanitizer.
  • When washing, wet your hands with clean water, lather soap on every surface, scrub your hands together for at least 20 seconds, and rinse before drying. Just how long is 20 seconds? Humming the “Happy Birthday” song from beginning to end twice.
  • Clean “high-touch” surfaces (like doorknobs and counters) in your home every day with a solution or half rubbing alcohol and half water.
  • Clean your mobile phone daily. Most people are touching their phones hundreds of times a day, making it ripe for harboring the coronavirus.
  • Stay away from people you know you are sick and stay away from someone who is coughing or sneezing near you.
  • Stay home when you are sick.
  • If you cough, cover your mouth and nose with a tissue, then throw the tissue in the trash. If none is available, sneeze into your arm or cover it with your hands. Wash your hands as soon as possible after a sneeze.
  • Clean and disinfect frequently touched objects and surfaces using a regular household cleaning spray or wipe. 

Should I wear a mask to protect myself?

Health experts recommend against using a mask. Most people have been using simple surgical masks which do nothing to protect the wearer from airborne viruses expelled through an infected person’s coughs and sneezes. These types of masks are more designed to keep the wearer from spreading whatever they have.

There is one type of mask that is more suitable for protection: The N95 mask, which is named so because it can filter out 95% of airborne particles, but even these are not foolproof and must often be fitted properly to provide the desired protection. The CDC does not recommend wearing an N95 mask if you have not been trained in how to wear it.

Stockpile stuff for your home

Experts suggest stocking at least a 30-day supply of any needed prescriptions, and you should consider doing the same for household items like food staples, laundry detergent, and diapers, if you have small children.

Remember, alcohol is a good disinfectant for coronaviruses so make sure to keep surfaces in your home clean.

What if you get sick?

The WHO recommends that if you feel sick, you should stay home. If you have a fever, cough and difficulty breathing, seek medical attention and call in advance to let them know your symptoms and that you are coming. Follow the directions of your local health authority.

Coverage Disputes Over Online Attacks Grow

cyber coverage

A federal court has ruled that an insurer’s professional liability policy must pay out $6 million for a company’s losses from a business e-mail compromise scam, even though the business lacked cyber coverage.

The ruling is part of a growing trend of businesses that haven’t purchased cyber insurance seeking coverage for cyber-related losses from other policies they do have, such as business liability, professional liability, and directors & officers (D&O) coverage.

Seeking coverage for cyber losses and for e-mail compromise scams from other than cyber policies is not often successful, and whether the insurer will pay out can depend on the nature of the loss.

In this latest case however, a judge in the U.S. District Court in the Southern District of New York ruled that American International Group must cover $5.9 million that a company had been duped out of by Chinese hackers in 2016.

AIG had disputed the claim saying that the professional liability policy the business had does not cover “criminal acts,” adding that it had never sold the company a cyber policy.

These disputes are becoming more common and you should pay attention to your policy exclusions, as well as consider cyber insurance, if you have assets that could be exposed through a cyber attack or fraud.

How was the business scammed?

SS&C Technologies received spoof e-mails that purported to come from one of the company’s clients, Tillage Commodities Fund, a commodities investment firm. The e-mails instructed the company to make six wire transfers to a bank account in Hong Kong.

The scammers masqueraded as Tillage employees with e-mail addresses that spelled “Tillage” as “Tilllage.”

But according to court documents, there were telltale warning signs that the e-mails were fishy:

  • One e-mail asking SS&C to wire $3 million contained only the words “How was your weekend?” and then the wire transfer details.
  • E-mails included grammatical errors and unusual syntax like “Let’s round up business today.”

Based on the above, staff at SS&C were not too diligent in looking out for possible

business e-mail compromise scams involving a third party hacker posing as someone else (a client, a vendor or even a manager or president of the targeted company) via e-mail and requesting a wire transfer into a bank account.

This type of scam, which cost organizations $300 million every month in 2018, according to the U.S. Department of Treasury, is covered by a standard cyber insurance policy.

SS&C did not have a cyber policy, so it sought coverage under its professional liability policy for the losses it sustained when transferring those funds. AIG did pay for SS&C’s legal defense costs after Tillage Commodities sued, but refused to cover the $5.9 million in stolen funds.

According to court documents, AIG’s policy included a clause that it would not provide indemnity coverage for losses arising from “dishonest, fraudulent or criminal acts.”

What this means for your firm

While this case worked out for the insured party, businesses should not rely on their non-cyber insurance policies to continue paying claims. As costs for cyber attacks like ransomware, malware, stolen data and business e-mail compromise scams grow, insurers are increasingly including clauses that explicitly exclude coverage for those risks.

If you have any important company assets in digital form and/or make or receive payments online, it would be wise to secure a cyber insurance policy.

If you don’t, you can try to seek coverage under other policies. That it may be difficult to obtain, but not impossible.

For example, if your company has D&O liability insurance and/or crime insurance, it may be able to seek coverage for any ransomware events since those policies will typically include coverage for kidnapping and ransom.

Some insurers are now providing — either deliberately or unintentionally — kidnapping and ransom coverage that applies to ransoms paid in response to cyber extortion. Among the events that these policies may consider cyber extortion are:

  • Threats to poison a computer system with malware.
  • Threats to change, damage or destroy programs or data stored on a system if the owner does not pay a ransom.

That said, many insurers who provide this coverage likely did not anticipate covering ransomware losses and have started changing their D&O and crime policies to specifically exclude ransomware.

Other insurers have added deductibles to the coverage, mirroring the terms of cyber policies, while others have capped the amount of business interruption coverage they will provide for cyber-extortion losses.

New Rules Require Employers to Provide IIPP upon Request

work safety IIPP

New Cal/OSHA regulations will require employers to provide access to their injury and illness prevention programs upon request.

Under the new rule, which is expected to take effect in April, employers will be required to provide a copy of their IIPP within five days upon an employee’s or an employee’s representative’s (a lawyer’s) request. The employer can provide it in electronic or printed form.

That said, the new rule excludes requests for records of the steps the employer has taken to implement and maintain the IIPP. This was excluded at the behest of employers who raised concerns that allowing such requests would give attorneys a green light to file requests in hopes of discovering errors or “improprieties.”

Despite the current absence of a rule, many employers already provide employees access to the IIPP through the availability of printed and/or electronic copies.

“For employers that do not currently provide such access, they will need to ensure that employees can access a free copy of the IIPP directly or through a designated representative upon request,” Cal/OSHA’s board staff wrote in the “Final Statement of Reasons” for the rulemaking package. “As such, providing access need not be a complex procedure requiring costly development.”

Employer groups had lobbied for a 10-day window for providing the IIPP, while labor groups wanted a faster timeline of just 48 hours. The board compromised with the five-day rule.

The rule was needed because the current IIPP standard does not explicitly state that employees should have access to their company’s IIPP.

Current IIPP standard

Every employer in California is required to have an effective IIPP. This basic safety program for your workplace addresses the hazards your employees face at work each day, and it must be in writing.

Cal/OSHA has a guide for creating an IIPP.

But, you should not just create an IIPP because you have to. Going through the process of creating an IIPP ― as well as updating it periodically ― can also help your organization by:

  • Preventing workplace injuries.
  • Reducing your workers’ compensation insurance rates.
  • Helping you to find ways to boost your workflow.
  • Improving the bottom line of your business.

Elements of an effective IIPP

  • The plan is in writing and reflects what you actually do.
  • A point-person, who is in charge of managing the IIPP process.
  • Input from department heads as well as rank and file employees when updating or creating your IIPP.
  • Requiring that everyone follows the rules of the program.
  • A system for reliable, prompt communication between supervisors and line employees on safety.
  • Conducting regular inspections to identify hazards.
  • A framework for investigating accidents and illnesses, to discover the cause and to prevent recurrence.
  • Requiring that hazards are corrected promptly when found.
  • A regimen for training employees on the hazards they may encounter at work.
  • Documentation of training and workplace inspections.

It’s Time to Post Your Form 300A!

form 300 A

We are reminding employers to post OSHA Form 300A from Feb. 1 to April 30, as required by law.

Form 300A, which lists a summary of the total number of job-related injuries and illnesses that occurred last year, must be posted in a conspicuous place where it is visible to all of your employees.

The summary must include the number of job-related injuries and illnesses that occurred in 2019 and were logged on OSHA Form 300, “Log of Work-Related Injuries and Illnesses.”

To assist in calculating incidence rates, information about the annual average number of employees and total hours worked during the calendar year is also required.

If your business recorded no injuries or illnesses in 2019, you must enter “zero” on the total line and still post the form, which must be signed and certified by a company executive. Form 300A should be displayed in a common area where notices to employees are usually posted.

Certain employers are exempt from the posting requirement, including:

  • Small employers ― those with 10 or fewer employees at all times during the year.
  • Employers in low-hazard industries ― see list of partially exempt industries at: (PDF).

 

If you don’t have copies of forms 300 and 300A, you can find them here.

Employer Guide for Dealing with the Coronavirus

coronavirus

As the outbreak of the 2019 novel coronavirus gains momentum and potentially begins to spread in North America, employers will have to start considering what steps they can take to protect their workers while fulfilling their legal obligations.

Employers are in a difficult position because it is likely that the workplace would be a significant source of transmission among people. And if you have employees in occupations that may be of higher risk of contracting the virus, you could be required to take certain measures to comply with OSHA’s General Duty Clause.

On top of that, if you have workers who come down with the virus, you will need to consider how you’re going to deal with sick leave issues. Additionally, workers who are sick or have a family member who is stricken may ask to take time off under the Family Medical Leave Act.

Coronavirus explained

According to the Centers for Disease Control, the virus is transmitted between humans from coughing, sneezing and touching, and it enters through the eyes, nose and mouth.

Symptoms include a runny nose, a cough, a sore throat, and high temperature. After two to 14 days, patients will develop a dry cough and mild breathing difficulty. Victims also can experience body aching, gastrointestinal distress and diarrhea.

Severe symptoms include a temperature of at least 100.4ºF, pneumonia, and kidney failure.

Employer concerns

OSHA — OSHA’s General Duty Clause requires an employer to protect its employees against “recognized hazards” to safety or health which may cause serious injury or death.

According to an analysis by the law firm Seyfarth Shaw: If OSHA can establish that employees at a worksite are reasonably likely to be “exposed” to the virus  (likely workers such as health care providers, emergency responders, transportation workers), OSHA could require the employer to develop a plan with procedures to protects its employees.

Protected activity — If you have an employee who refuses to work if they believe they are at risk of contracting the coronavirus in the workplace due to the actual presence or probability that it is present there, what do you do?

Under OSHA’s whistleblower statutes, the employee’s refusal to work could be construed as “protected activity,” which prohibits employers from taking adverse action against them for their refusal to work.

Family and Medical Leave Act — Under the FMLA, an employee working for an employer with 50 or more workers is eligible for up to 12 weeks of unpaid leave if they have a serious health condition. The same applies if an employee has a family member who has been stricken by coronavirus and they need to care for them.

The virus would likely qualify as a serious health condition under the FMLA, which would warrant unpaid leave.

What to do

Here’s what health and safety experts are recommending you do now:

  • Consider restricting foreign business trips to affected areas for your employees.
  • Perform medical inquiries to the extent legally permitted.
  • Impose potential quarantines for employees who have traveled to affected areas. Ask them to get a fitness-for-duty note from their doctor before returning to work.
  • Educate your staff about how to reduce the chances of them contracting the virus, as well as what to do if they suspect they have caught it.

If you have an employee you suspect has caught the virus, experts recommend that you:

  • Advise them to stay home until symptoms have run their course.
  • Advise them to seek out medical care.
  • Make sure they avoid contact with others.
  • Contact the CDC and local health department immediately.
  • Contact a hazmat company to clean and disinfect the workplace.
  • Grant leaves of absence and work from home options for anyone who has come down with the coronavirus.

If there is a massive outbreak in society, consider whether or not to continue operating. If you plan to continue, put a plan in place. You may want to:

  • Set a plan ahead of time for how to continue operations.
  • Assess your staffing needs in case of a pandemic.
  • Consider alternative work sites or allowing staff to work from home.
  • Stay in touch with vendors and suppliers to see how they are coping.
  • Consider seeking out alternative vendors should yours suddenly be unable to work.

Searching Social Media During Hiring Process

social media facebook linkedin job application

If you are hiring, you should not overlook the importance of vetting prospective employees through social networking sites such as Facebook and LinkedIn.

A recent survey by CareerBuilder found that 70% of hiring managers said they had used Facebook or other social networking sites to research job candidates in 2018, up from 60% the year prior. Also, 11% of hiring managers said they planned to start using social networking sites for screening.

With so many people posting their lives online, employers can learn a lot about candidates. There are plenty of legitimate reasons to look at the social networking profiles of prospective hires.

Employees in sales, public relations and customer service serve as representatives for the companies they work for, so employers have a legitimate interest in ensuring potential workers won’t embarrass the company,

The most commonly checked social media accounts are Facebook and LinkedIn. Some employers even search for blogs or look at a candidate’s Twitter account.

The search can pay off for the employer.

More than half of employers (54%) in the CareerBuilder survey reported finding content on social media that had caused them not to hire a candidate. But also, many employers reported finding positive things on someone’s social media accounts that had helped them decide to hire the applicant.

Top Reasons Found on Social Networking Sites for Considering a Job Applicant

  • Profile provided a good feel for candidate’s personality and fit within the organization: 50%
  • Profile supported candidate’s qualifications: 39%
  • Candidate showed creativity: 38%
  • Candidate showed solid communication skills: 35%
  • Candidate was well-rounded: 33%
  • Others posted good references about candidate: 19%
  • Candidate received awards and accolades: 15%

Top Reasons Found on Social Networking Sites for Passing Over a Job Applicant

  • Candidate posted provocative or inappropriate photographs or information: 53%
  • Candidate posted content about drinking or using drugs: 44%
  • Candidate bad-mouthed prior employer or clients: 35%
  • Candidate showed poor communication skills: 29%
  • Candidate made discriminatory comments: 26%
  • Candidate lied about qualifications: 24%
  • Candidate shared confidential information from prior employer: 20%

Don’t overstep – Be warned, though. There is a fine line of overstepping when looking at candidates’ social media pages. Here are some tips:

Be fair – Review every applicant in the same manner.  If you investigate one applicant’s social media accounts, you should look at every applicant’s accounts. This is to avoid the appearance of discrimination.

Never ask for access to an applicant’s accounts – Demanding passwords could violate a multitude of different laws (a number of states have passed laws barring employers from demanding username and passwords for social media accounts), and could also put the applicant in violation of the terms of service of most of the major social media sites.
In other words, any review should be limited to public information.

Keep it timely – Complete searches later in the hiring process, and preferably after an offer of employment has been made. That sounds counter-productive, but if you learn that an applicant is a protected class by virtue of a social media search, unconscious bias steps in, and you will be in a more difficult position should a discrimination issue arise.
As with any other part of the hiring process, document everything that is done, including saving screen shots of social media pages reviewed.

Study Finds Physical Medicine Reduces Opioid Use Among Injured Workers

physical therapy

Physical medicine treatments like physical therapy, acupuncture and chiropractic care correspond with reduced opioid prescription use among injured workers, a new study has found.

Workers who were treated using physical medicine while also being prescribed an opioid all received lower doses of prescribed opioids compared with workers with similar injuries who did not receive physical treatment, according to the study by the Workers’ Compensation Insurance Rating Bureau of California.

The study shows great promise for reducing opioid use among injured workers, who are all susceptible to the possibility of addiction if prescribed these high-powered painkillers for extended periods of time.

An enormous threat

Opioid overdoses have become one of the biggest public health threats in the United States over the past decade and the costs to the workers’ comp system have been tremendous. That’s because when an injured worker who has been prescribed opioids becomes addicted to them, the insurer will also have to pay for addiction treatment, which in turn increases the cost of the claim and has a negative impact on the employer’s workers’ comp rates.

The use of physical medicine has increased in California since 2014, when the state workers’ compensation fee schedule increased reimbursements for these treatments. The study found that since then, physical medicine has accounted for a larger proportion of total medical costs per claim.

But the increased expenditures may be worth it if opioids are also prescribed to injured workers. The Rating Bureau found that:

  • For claims involving physical medicine, there was a continuous and sharp decline (86%) in the utilization of both opioids and other pain medications.
  • Meanwhile, there was a rapid increase (70%) in the concurrent use of physical medicine treatments and medical treatments other than pain medications.
  • Among soft-tissue injury claims that had at least one opioid prescription within one year of the injury, those with early physical therapy had, on average, significantly lower doses (23%) of opioids prescribed than similar claims without early physical treatment.
  • Soft-tissue injury claims involving physical therapy during the first 30 days of the initial medical visit were less likely to initiate opioid use within one year of the injury, compared to similar claims without early treatment.
  • While chiropractic care was less frequently used on soft-tissue injury claims, its early use was found to be associated with a significantly lower probability of opioid use.

Increased contact beneficial

Some experts also say that increased contact with an injured worker can reduce the chances of them abusing these high-powered painkillers.

Physicians who treat injured workers tend to spend significantly less time with them compared to doctors treating group health plan patients, according to a report in the trade publication <i>Carrier Management</i>.

Having more one-on-one time with their treating physician, group health patients are often better educated about the types of treatment available to them, including opioid alternatives. As a result, these individuals are less likely to get a prescription that may not be the best treatment option for them.

Opioids can delay an injured worker’s return to work. Sadly though, workers who take opioids for more than three months usually don’t return to work at all, due to dependence or other side effects, according to a study by the American Psychiatric Association Foundation.

Not only that, but a person using opioids can pose a danger to themselves and others while on the job. And workers with a pain-medication use disorder miss an average of 29 days a year of work, according to the Centers for Disease Control.

The takeaway

If you have an injured worker, you can talk to your workers’ comp carrier’s claims adjuster about possible physical medicine approaches:

  • If there are opioids prescribed, talk to the insurer about how you can play a supporting role in trying to prevent the worker from spiraling into addiction.
  • To best reduce the chances of opioid abuse, there should be a collaboration between the claims adjuster, nurse case manager, treating physician and the employee.
  • The treating physician should continuously monitor the injured worker throughout the life of the claim, and the doctor should be in regular communication with the claims adjuster.
  • There are many alternatives to opioid treatment, including acupuncture, cognitive behavioral therapy, physical therapy, chiropractic treatment and yoga.