The direct and indirect costs of a workers’ compensation claim can add up quickly.

Direct costs include indemnity benefits (for lost wages) and medical benefits. Indirect costs can include overtime salaries (for other employees covering the work of the injured employee); reduced productivity; hiring and training costs; and managers or supervisors being pulled in to cover work and thus losing time from their administrative duties.

Such indirect costs can reach three to five times the total of direct claim costs. Indirect costs are not typically covered by insurance, yet can have a significant impact on municipal budgets.

“Loss of efficiencies and loss of productivity are concerns,” said Judith Perkins, the human resources director in Reading. “It can put others at risk when someone has to cover or do the work of two people – particularly with physical jobs, like in public works.”

A return-to-work program is designed to return injured employees to the workplace as soon as it is medically reasonable to do so, even if it’s initially at a limited capacity. It also accelerates the reintegration of injured employees into a full performance mode and allows them to achieve productive goals.

Some injuries will preclude the return of an employee to any active work, but the majority of injuries sustained by municipal employees are not serious or life-threatening. In these cases, a return-to-work program is designed to break the employee disability cycle.

Why return to work?
The longer an injured employee is out of work, the less likely he or she is to ever return. Assigning a transitional duty can help to retain productive employees while controlling workers’ compensation costs. Transitional duty also improves employee morale, as the injured employee feels positive about his or her contributions while continuing to rehabilitate. All parties can benefit from balancing quality medical care and transitional duty based on the treating provider’s recommendations.

Many municipalities have policies restricting employees from returning to work unless they have a “full-duty release” from their treating physician. Despite informal efforts by some to bring injured employees back to work on a modified basis, most managers and supervisors still tend to follow the established policy as a safe course of action.

Under such policies, however, injured employees may tell their treating physician that there is no modified work available and a “full-duty release” is required. Without any guidelines from the employer, the physician is dependent on the injured worker’s explanation of tasks available in the workplace, and the employee is often allowed to stay home and collect indemnity benefits, netting approximately the same income as when they were active.

When an injury occurs, the employee typically seeks medical care from a physician, who determines the extent of the injury. If this treating physician determines that the injury is not serious enough to categorize the injured worker as permanently or totally disabled, the physician may write a “partial release” specifying the limitations under which the employee may return to work.

At this point, the employer should communicate to the physician a detailed description of the specific job duties.

In the event of an injury in Reading, the town works closely with its occupational health provider to determine the best course of treatment.

“We want to make sure people do not come back too soon,” Perkins said. “We want to make sure they are fully 100 percent – unless we have a light duty situation for them.”

Having a good relationship and maintaining open communication with the provider are key, she said.

Municipal implementation
Many municipal governments have refrained from implementing return-to-work programs – which are prevalent in the private sector – because of challenges related to collective bargaining agreements. Today, however, some communities are beginning to implement successful programs to help manage and reduce workers’ comp costs. While a formal initiative is recommended, informal return-to-work programs can be used to deal with situations on a case-by-case basis.

According to the U.S. Department of Labor, more than half of return-to-work accommodations cost the employer nothing, and 74 percent of employers who implemented accommodations rate them as either “very effective” or “extremely effective.”

A study by the American Society of Safety Engineers showed a “significant cost-savings opportunity” with return-to-work programs – with a possible return on investment of $8 to $10 for every dollar spent on implementation. These programs have markedly reduced total workers’ compensation indemnity costs, while also reducing medical and rehabilitation expenses as well as lost workdays.

For any return-to-work program to be successful, employees must be informed of management’s concern for their welfare before an injury occurs. Employees must be provided with instructions indicating how and when to report an injury, and they should understand that a return-to-work program is a part of their employee benefits.

An effective return-to-work program requires a set of policies and procedures that facilitates post-injury management during every step of rehabilitation.

Implementation of a return-to-work program should include the following steps:

1. Develop and issue a policy statement.

2. Appoint a coordinator to explain the program to department heads.

3. Create modified job and task description manuals.

4. Conduct a task assessment.

5. Develop a plan to provide treating physicians with information about your operations and specific job functions.

6. Develop a communications plan.

7. Prepare a written procedure that details the steps to be taken when an accident occurs.

8. Immediately alert the workers’ compensation carrier of all workplace injuries.

MIIA distributes a “Return-to-Work Policy Manual” and works with members to implement programs. A formal initiative is recommended, but 46 members have successfully used an informal return-to-work program at least once over the past 18 months, thus decreasing the exposures of these claims.

The most important strategy to minimize workers’ compensation claims exposure is to immediately report all claims to your insurance provider and have your adjuster keep you involved in the disability and medical management of the claim.

Niko Pappas is MIIA’s Director of Workers’ Compensation Claims.