workerscompbiz.com

A lump sum settlement (LSS) is settling a claim for an amount agreed to by the employer and the claimant. In state fund claims, the Bureau of Workers Compensation pays the settlement amount to the claimant, charges that amount to the employer’s premium rate calculations, and eliminates all reserves.

There are usually two reasons why employers want to settle claims. One reason is to stop the time and money it takes to continue to fight a claim. The other reason is to lower the claim’s impact on premium rates by trading a fixed compensation settlement amount for the unpredictable (and often excessive) reserves.

It is extremely important to negotiate a settlement that accurately reflects the value of the claim, but that will not damage the employer’s premium rates any more than it already has. The BWC has to approve the settlement, although if both parties agree, the BWC usually does not dispute it.

For some claims, it helps to negotiate a cash settlement to be paid by the employer outside of the BWC. The claimant gets more money, but the total settlement is not so high that it eliminates the value to the employer. For example, an employee claimed a lumbar strain which was disallowed. But the employee filed to court, and the Attorney General offered $10,000 to settle the claim. The employer offered to pay $5,000 directly to the employee, and so the claim was settled for amount in the experience that enabled the employer to stay in group rating.

A claim should not be settled when the claimant still works for the company. First, the claimant may injure the same body parts again, and it is better for premium rates to not have a new claim filed. Second, it is unwise to teach employees that there can be cash money to be made for filing workers’ compensation claims.

Who do you need to help with settlements? First and foremost, you need a good actuarial TPA to determine the maximum settlement amount. The TPA should be able to explain the impact on your premium rates at various settlement levels.

If the claim is in court, or has been contentious, you should have an attorney who specializes in workers’ compensation to help with options concerning getting a release from all other liabilities and/or employment.

Workers’ Compensation Coverage for Out-of-State Employees

Ohio companies no longer have to pay premiums in more than one state for the same employees.

PROBLEM: DOUBLE PREMIUMS
Before Senate Bill 334 took effect in September 2008, many Ohio employers who had workers in other states had to pay workers’ compensation premiums in Ohio and in the state where the employees worked. In other words, the employer had to pay twice for coverage for the same employees. Plus, the employer was exposed to having duplicate claims filed in two different states for the same injury.

OHIO EMPLOYER WITH EMPLOYEES HIRED TO WORK IN ANOTHER STATE
Now, if an Ohio employer has workers’ compensation coverage in another state, it will not have to pay Ohio premiums for the out-of-state workers. The Ohio employer can complete form U-131 and provide a copy of the non-Ohio policy to the Ohio BWC. Starting with the 2009 payrolls, the Ohio employer then will report the out-of-state payrolls to the Ohio BWC, but it will not have to pay Ohio premiums for those employees.

NON-OHIO EMPLOYER WITH EMPLOYEES HIRED TO WORK IN OHIO
If a non-Ohio company has workers in Ohio, the company should have Ohio workers’ compensation coverage. Even if the employer’s home state requires coverage for all employees regardless of their work location, it may be prudent to have Ohio coverage and pay the minimum administrative cost every six months in case Ohio is found to have jurisdiction over an injury that occurs in Ohio.

NON OHIO EMPLOYEES WORKING SHORT TERM IN OHIO
The Ohio BWC will recognize out-of-state coverage of employees who are residents of another state, until the employee has worked 90 days or more in Ohio. After 90 days, the employer must obtain Ohio coverage. However, if the other state does not similarly recognize Ohio coverage for Ohio workers temporarily working in its state, then employers in that state who have workers in Ohio must obtain Ohio coverage (reciprocity).

EMPLOYEE CANNOT FILE A CLAIM IN OHIO AND ANOTHER STATE
If an employee is injured while working in another state, and receives benefits and compensation under that state’s workers’ compensation policy, the employee cannot collect benefits from Ohio for the same injury.

This article was originally published in the February-March 2009 NAWBO Cleveland Update.

What does a new business owner need to know about workmen’s compensation?

First, you must have Ohio workers’ compensation coverage for your Ohio employees. Go to the Bureau of Workers’ Compensation (BWC) website at www.ohiobwc.com and click on Apply for Coverage under the orange Employer heading. This will take you to a brief explanation of the application process, and you can download the application to make sure you have all the information required. You can also file your application on line, but you won’t know how much your initial premiums will be until after you have applied. You or your accountant can call the BWC before you apply to find out.

If you are a sole proprietor or partner in a partnership, you can (and should, in my opinion) elect coverage for yourself. If you do the labor yourself, your chances of being injured are higher and your need for coverage is greater. Even if you are office based, you can still be injured in an auto accident driving from meeting a prospect or customer. If you become unable to work, you will need quick treatment and efficient bill payments so you can continue to concentrate on your business. See the July 24, 2009 post for details on minimum and maximum payroll to report.

You will receive a Payroll Report (form DP-21) in late December and late June. Enter the six-month payroll, multiply it times the premium rate, and send it back to the BWC with payment by check or credit card. If you pay by credit card on line, you can choose to pay your premiums every three months, if that is better for your cash flow.

Second, once you file an application for coverage, the BWC will ask you to choose a Managed Care Organization (MCO). This is a company that will manage the medical care of your employees when they file an injury claim. You do not pay the MCO; it is paid a portion of your premiums by the BWC. Every two years, you can easily switch to a different MCO during open enrollment.

You may receive letters from an MCO claiming to be endorsed by the BWC, or creating the impression that it is a division of the Ohio BWC. No MCO is endorsed by or is a part of the BWC. Personally, I avoid doing business with any company that starts off with misleading communications.

And last but not least, the name changed back in 1977 to the Bureau of Workers’ Compensation. It’s easier to say workmen’s compensation, but it’s just not politically correct.

The purpose of this blog is to comment on the wacky world of Ohio workers’ compensation. I want to point out the good things being done by the Ohio Bureau of Workers’ Compensation (BWC) and the Industrial Commission of Ohio (ICO), as well as some of the decisions and actions that strike me as questionable. I hope that you will provide additional information on any topic. Or ask me questions about workers’ comp in Ohio. I’m not a lawyer and can’t give legal advice, but I can give you my opinion based on more than 25 years of experience.
I will also share my opinions on some other business issues, like human resources and how it can interact with Ohio workers’ compensation.

“What’s in a name? That which we call a rose would by any other name smell as sweet.” At least, that’s how I remember it from eight grade English class (now called Language Arts). Juliet in Shakespeare’s Romeo and Juliet may have been young but she understood that while Romeo may be lovable, his family name decreed that he was her family’s enemy.

The term for the person who files a workers’ compensation claim in Ohio: Injured Workers (IW). Originally, the term was Claimant, but a number of years ago the legislature changed it to Injured Worker. What’s the difference? Well, sooner or later, the vast majority of people who have been injured on the job are no longer injured. And what about the person who filed a claim but wasn’t injured, or didn’t work for the company the claim was filed against? Claimant is a more appropriate description of a person claiming benefits. The BWC and ICO are required to give the benefit of the doubt to the claimant, and so it isn’t necessary to stack the deck in their favor any more than it already is.