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Insurer balks at OSHA guidelines discouraging incentive programs

Insurer balks at OSHA guidelines discouraging incentive programs

Great American Insurance Co. has chided the Occupational Safety and Health Administration for discouraging employers and carriers from adopting incentive programs as part of their workplace safety programs.

In 2012, OSHA issued a memorandum that called incentive programs that discourage employees from reporting their injuries problematic and reminded employers that they cannot discriminate against employees who exercise their rights to report injuries. A proposed update to OSHA's safety and health program management guidelines reiterates that incentive programs for workers or managers that tie performance evaluations, compensation or rewards to low injury and illness rates can discourage injury and illness reporting.

But the Cincinnati, Ohio-based workers comp carrier and its Strategic Comp division submitted testimony to the National Advisory Committee for Occupational Safety and Health that stated that the incentive programs implemented by Strategic Comp's policyholders do not involve unlawful retaliation and do not result in underreporting of work-related injuries and illnesses. These programs are also critical to changing safety cultures and preventing a number of fatalities and serious injuries and illnesses, according to the testimony.

“OSHA has completely ignored the benefits of these programs for years,” Lawrence Halprin, a partner at Keller & Heckman L.L.P. in Washington and counsel for Great American, testified at a NACOSH meeting on Friday.

Strategic Comp currently has about 700 policyholders, with a pool of about 300,000 workers per year, and losses for its policyholders over the last five years were $372 million, or 39%, lower than National Council on Compensation Insurance actuarial predictions, according to the insurer. Catastrophic claims, defined by Strategic Comp as claims greater than $475,000, were 59% below NCCI actuarial estimations.

Strategic Comp's percentage of claims reported within two weeks of the accident date was 94% compared with an 82% industry average, which Mr. Halprin highlighted as a sign that incentive programs do not suppress injury reporting.

“The data that's available indicates there is no pervasive underreporting in the United States that is in any way intentional,” he said. “There may be isolated cases from some companies. The right approach to those is using the enforcement tools that are at hand, not go and establish some sort of rule or discouraging policy that results in the inability to use these kinds of programs. Even if they're not banned, if there's a guidance document like the safety and health program (management) guidelines that basically says they're bad, employers will be discouraged from using them because they anticipate that if they do use them, they'll get a biased enforcement action.”

Mr. Halprin called the inclusion of language discouraging incentive programs “counterproductive” and asked that it be stricken from the guidelines — a recommendation that NACOSH did not adopt.

“My experience has been with a number of these programs is that we see a spike on the non-occupational side because people are hesitant to report their injuries as occupational,” said Joseph Van Houten, senior director of worldwide environment, health and safety at Johnson & Johnson in New Brunswick, New Jersey and an employer representative on NACOSH. “They want to be treated, so they go to their personal physicians for injuries that are really occupational in nature.”

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