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Integrating comp, disability lowers costs, speeds return to work


TUCSON, Ariz. — Entrenched silos and internal politics remain the biggest impediments to combining workers compensation and disability programs, but captive owners should push through these obstacles because such integration can significantly reduce their workers comp costs, speed employees’ return to work and reduce litigation, experts say. 

The workers compensation program of the University of California, which has a Washington, D.C.-based captive called Fiat Lux Risk, is part of the university’s risk programs, which falls under the chief financial officer’s jurisdiction, while the non-occupational disability is the domain of human resources – “two very different silos,” Kevin Confetti, deputy chief risk officer for the university, said at the Captive Insurance Companies Association conference in Tucson, Arizona, on Monday.

“We just look at things very differently, although I think the best practice is to have these two programs integrated,” he said. “I think it’s definitely the best practice simply because it’s ease of use for our employees. California is a very labor intensive, workers compensation administrative nightmare. If we were able to combine these programs, the streamlining for our employees … would be very beneficial to our program.”

The university funds return to work coordinators through its comp program that its non-occupational program benefits from, Mr. Confetti noted.

“The programs being aligned, having similar benefits, eliminates the gaming and ends up putting people in the right bucket,” said Karin Landry, a Boston-based managing partner with Spring Consulting Group, a unit of Alera Group. “To get there, usually we have to look at the processes and procedures that people have in place because not aligning those can have a big negative impact as opposed to having it run smoothly.”

In California, for example, the university can delay a workers comp claim for up to 90 days for investigation, and standard procedure is to send employees to file for non-occupational disability benefits until a determination is made on the comp claim, Mr. Confetti said. But many times the university eventually accepts the claim and then has to circle back with the non-occupational insurer to determine how much they need to be reimbursed and what benefits need to be paid to the employee by the comp program.

“If we had a seamless program, one that is integrated, we wouldn’t put the employee through all that rigmarole, for lack of a better word,” he said. “It's very burdensome for our employees and honestly I believe it causes litigation. As we all know, California is a very litigious state and going to an employee and saying, ‘Hey, we’re going to delay your work comp claim and go file a non-oc claim,” I think that puts people at the defensive.”

In the university’s system, a top employment practices liability claim over the last 10 years has been disability discrimination and an examination of these cases revealed that despite providing resources and training, its supervisors and managers still struggle with Family and Medical Leave Act, Americans with Disabilities Act and combined leave requests, Mr. Confetti said “they just don’t know how to handle leaves.”

“Then you throw another layer on top of it: Is this workers compensation or is this non-oc disability, it just adds more confusion for our supervisors and managers and I think it creates more claims versus if we had an integrated program where they just go to one person,” he noted. “I think it would produce much better results for us.” 

But internal politics has proven to be a difficult barrier to such integration efforts, said Fredrik Finnman, head of group risk management, Swedish engineering group Sandvik Group, which has a Swedish-based captive.

“From a technical and financial perspective, it would make sense to integrate the two programs, but internal politics and getting the buy-in from HR are probably the major obstacles,” he said.

But such integration has demonstrable benefits, Ms. Landry said. For example, a health care organization with which Spring Consulting worked that had about 12,000 employees was funding both its long-term disability and workers compensation in its captive and decided to fund a return-to-work coordinator that the human resources department couldn’t afford. Spring Consulting examined the organization’s losses and realized that musculoskeletal injuries – a key driver of claims – was covered fully under the comp program but not under the disability program, she said.

“Often we find when we start to look at the data, we see that some of the same injuries or illnesses are driving the disability claims as are driving the workers comp claims so why wouldn’t you want to look at them both together,” Ms. Landry said. “It makes a lot of sense.”

The health care organization exceeded a goal of placing more than 75% of employees with a work capacity to a transitional duty role within five days of their release-to-work date, she said. Spring Consulting estimated the organization would save about $6.1 million “just by putting some of these programs in place and addressing it on a more efficient basis, eliminating some of the missteps, making the path clearer and programs more aligned with one another,” Ms. Landry said. 








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