Recent News
Layoffs: Comp Claims Could Increase
By Roberto Ceniceros of Business Insurance
Job reports released last week underscore a growing challenge, risk managers face: managing workers compensation losses in the midst of layoffs that can exacerbate claim frequency and severity.
Employees off the job due to a legitimate injury now may be more motivated to extend the life of their workers comp benefits when their jobs may soon be eliminated or they already have been downsized, say brokers, third-party administrators and workers’ compensation managers.
Despite economic conditions, though, most employees will resolve their claims as soon as is medically possible if employers treat them fairly and with respect, said Dave Dolnick, risk manager for La Mesa, Calif., construction company, The Brady Companies.
But job losses also are pressing workers and some may be motivated to extend a claim, Mr. Dolnick and others agree.
"What we have observed, both somewhat with our own (limited) claims and also in chatting with peers, is that claims that are otherwise legitimate become much more difficult to resolve in this kind of a market, when the injured worker doesn't have the option of a job to go back to," Mr. Dolnick said.
Some employees with diminished employment prospects will be less responsive to return-to-work efforts that otherwise would help render them fit for their old job or
capable of working for a new employer if a job were available, several observers agree.
"There is a (claims) cost," said Darrell Brown, workers comp practice lead for Sedgwick Claims Management Services Inc. in Long Beach, Calif. "If someone knows that their job is going away, or has been eliminated, the motivation to return to work is much less."
Other laid-off employees may reopen old claims or file new ones for soft-tissue injuries, back pain and other ailments as an alternative income source, depending on state statutes of limitation for bringing claims, said Pam Ferrandino, executive vp and casualty prac- tice leader for Willis HRH in New York.
New and reopened claims could be a particular issue as unemployment benefits expire in regions where several employers have shut down factories and alternate employment opportunities no longer exist, Ms. Ferrandino and others said.
Severe Downturn
Data compiled by the New York-based Insurance Information Institute and released last week shows that during the past four recessions, workplace injury incidence rates actually have declined.
But today's recession is the longest since 1981 and workers’ comp managers, brokers and TPAs say a more severe downturn is likely to include more workers comp claimants among the employees losing their jobs.
A risk manager in the construction industry said that for the first time in two decades, her company has terminated workers comp claimants. They were among a substantial portion of her company's nationwide workforce let go, said the risk manager, who asked not to be identified.
The Labor Department on Friday announced that 598,000 jobs were lost in January, raising the unemployment rate to 7.6%, the highest level in more than 16 years.
Initial applications for unemployment benefits reached 626,000 for the week ending Jan. 31, up from 591,000 the previous week, a 26-year high, the U .S. Department of Labor reported last week. .
So far, workers comp claims have not spiked at FleetWood Enterprises Inc. although the recreational vehicle and manufactured home builder has closed several. plants, said Bill McMahon, the Riverside, Calif.-based company's risk manager.
Fleetwood's programs for reducing claims severity and frequency are paying off. But if the recession continues, Mr. McMahon said he expects costs for open claims will climb, especially in regions where Fleetwood and other employers have closed plants and few jobs are available.
"I do expect to see it,” Mr. McMahon said.
The potential for new claims and workers comp cost increases when jobs disappear from an entire community can be substantial enough that risk managers will need to collaborate with the corporation's chief financial officer to include those expenses into the overall charge for shuttering operations, said Mark J. Noonan, managing director and workers compensation practice leader at Marsh Inc. in New York.
“You have to put all that into the pot,” along with other expenses such as severance benefits, Mr. Noonan said. You don't want to surprise your CFO with, 'Oh, by the way, we need to book another $20 million for potential comp claims.'”
Greater Investigation
Meanwhile, risk managers-even as some of their own staff may be facing termination under corporate budget cuts-are being more vigilant than usual for claims that are not legitimate or can be terminated if medically appropriate, several sources said.
“There is definitely an 'on-alert' kind of behavior (along with) the application of greater investigation” into claims, said Betsy Robinson, vp-product management and market analysis for Intracorp, a Philadelphia-based unit of CIGNA Corp.
Employers are undertaking more descriptive documentation of job functions, said Kimberly George, vp and managed care practice lead for Sedgwick in Chicago. The documentation can help show injured worker physicians that an employee is physically capable of returning to his or her job, even if that job now may have to be with another employer.
“It's probably a more important practice today as we work on those claims that are impacted by not having a job to return to and making sure the physician has a good understanding of what that job is,” Ms. George said.
Six Dead In Shooting at Atlantis Plastics in Henderson
HENDERSON, KY - Six are dead after an early morning shooting at Atlantis Plastics factory in Henderson, KY.
Police say a gunman shot six people & then himself shortly after midnight.
They are still unsure what caused the incident, but say the shooter had an argument with a supervisor earlier in the night. Police do not know if the argument was a factor in the shooting at this time. They say the gunman left after the argument on a regular break, then came back with a handgun.
Six people have been confirmed dead to NEWS 25, including the gunman. A seventh victim is in an Evansville hospital. No names are being released at this time.
Henderson Police say they have surveillance tape from the factory of the shooting. They have scheduled a news conference for 3:00 PM today.
NEWS 25 will be there, and continue to update you with the latest information throughout the day.
UPDATE 6:52am
HENDERSON, KY - The Vanderburgh County Coroner's office tells NEWS 25, one of the shooting victims rushed to an Evansville hospital is now dead. That brings the death toll to six people, including the gunman.
The Coroner's office says the seventh shooting victim is in critical condition with a gun shot wound to the head.
The Henderson Police Department will be holding a press conference at 3:00 PM today.
UPDATE 6:28am
HENDERSON, KY - Henderson police tell NEWS 25, they have surveillance tape from Atlantis Plastics that shows most of the shooting. They tell us, investigators will use the video to help them piece together what happened.
Police say the name of the victims will not be released until their families have been notified.
Officials tell us 34 people were inside the factory when the gunman started shooting.
NEWS 25 will continue to follow this story throughout the day.
HENDERSON, KY - A man opened fire in a Henderson, KY plastics factory while on the job overnight. The shooting started around midnight, just after the third shift started at Atlantis Plastics. NEWS 25 is told by Henderson police that the gunman killed four people, injured two more and then killed himself.
Police say the gunman had a fight with his supervisor, and they went outside. That's when police say the gunman shot and killed the supervisor, and then went back inside the factory and started walking around shooting. Police say he killed a man & two women inside the factory before turning the gun on himself. Another man & woman were injured in the shooting. We are told both were taken to Evansville hospitals.
Henderson police say most of the employees have now left the building, and first shift workers should not report to work.
Copper theft plagues utilities nationwide
By Rhianna Daniels - 10.14.2008
DETROIT--Detroit Edison, an electric utility company serving Southeast Michigan, announced on Sept. 29 it has more than doubled the monetary reward for information leading to the arrest of copper thieves and individuals buying stolen copper.
The company will now pay $2,500, up from $1,000, for information pertaining to copper thefts and $5,000, up from $2,500, for information leading to the arrest of individuals purchasing stolen copper.
"We feel it is money well spent if we can help the community become safer and keep criminals off the street," Michael Lynch, DTE Energy chief security officer, said. "We've also been able to recover stolen assets. But the company can't take credit for all of it; we've had great cooperation from the police department and even with their strapped resources, they have taken this crime seriously and this year locked up roughly 100 individuals that were stealing copper. A lot of those folks, a good number of those, are a result of our tips."
Detriot Energy isn't the only utility offering a tip program. Georgia Power is rolling out its rewards program this week, offering a $500 reward for information leading to arrest or conviction of a perpetrator. Carol Boatright, a spokesperson for the company, said the program is being rolled out in the Northwest area of Georgia, where the issue is most prevalent, before being introduced throughout the rest of the state.
DTE originally started its rewards program last year, which was rather aggressive at that time, Lynch said. "We were offering twice as much as [Crimestoppers] for personal injury cases. Our reward was $1,000 for information that leads to the arrest from someone stealing our wire assets and $2,500 for information leading to buying copper," he said.
There is an important distinction between the two groups, Lynch said. "The first person is the thief and they are stealing wire, the second group of individuals are buying it, the scrap dealers, who know they are buying stolen wire. Underground after-hours scrap houses operate solely to exchange copper for drugs. The drug dealer weighs it and gives the thief approximately 50 cents on the dollar of what the scrap is worth. These are individuals that are affecting the community in a negative way."
Last year, Detroit Edison had nearly 250 incidents of copper theft from power lines and equipment and has reported 700 incidents total. In September, the company reported 4,000 feet of power lines stolen from one location alone.
Lynch said it is critical for the company to put a stop to copper theft, as it is a dangerous activity for the people stealing copper, as well as the people affected by power outages caused by copper theft.
Lynch said the company has taken a proactive stance to enhance security significantly in those locations after repeatedly getting hit. In one location, it experienced 39 breaking and enterings in a facility where the company stored wire. It replacing its fence with a metal wall and "we've haven't had a B&E since."
The collaboration between police and corporate security is another key element of DTE's program. Law enforcement only has so many resources to devote to these cases, Lynch said, DTE does a lot of what would traditionally be considered "police work" such as scrap house surveillance house and evidence gathering. "We look at non-traditional roles for both security and police," he said.
Both the Detroit City Council and the Michigan Legislature has acted to try to stem the tide of copper thefts. The City Council amended an ordinance to place stricter regulations on scrap metal dealers and scrap iron and metal processors, while the state legislature placed tougher penalties on certain entities caught buying or selling stolen copper cable. However, thefts have continued to rise as the local economy has soured.
Unfortunately, copper theft issues continue to grow nationwide. Lynch said he has seen an uptick in activity over the past year, and this year's number of incidents is keeping pace with 2007's record rate. Lynch attributes the growing rate to an increase in the theft of transformers, Lynch said.
In other areas of the country, utilities are looking at other avenues to cut down on metal theft. Pacific Gas & Electric Co. last year teamed up with a number of law enforcement agencies to battle the problem. Jan Morris, a spokesperson for PG&E, said the company continues to work with local agencies to mitigate the issue and its the "corporate security representatives assigned in each of our regions" are working to build these relationships locally.
The company is also "educating the community on possible dangers associated with the theft of metal," she said.
