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In recent years, some innovative healthcare leaders and organizations have developed and implemented formal communication and resolution programs (CRPs) that, when combined with advances in patient safety, exemplify fairness and build trust. The intent of CRPs is to lower malpractice costs and maintain patient trust in the healthcare system.

One program in particular, implemented by the University of Michigan Health System, is multifaceted and involves not only open communication about adverse events but also the following (1):

  • A critical investigation of the event to determine if the care provided met the standard of care and was reasonable under the circumstances
  •  An apology to the patient
  • Early offer of compensation or settlement, when the care fell below standard or was deemed not to have been reasonable.

Known as “The Michigan Model,” the UMHS program has reported success in reducing malpractice claim costs. An important aspect of this model is the critical investigation by the risk management department at UMHS that leads to a multidisciplinary committee review of the event (or claim) to determine whether the care provided was medically reasonable and if the care had an adverse effect on the patient’s outcome. The event may or may not be referred to peer review, but it is always evaluated for learning opportunities and quality improvement so as to prevent a similar event from occurring again. ASHRM has described a model with similarities in regard to classification and culpability decision making about preventable harm events. [See: ASHRM. Serious Safety Events: A Focus on Harm Classification: Deviation in Care as Link. Getting to Zero™ White Paper Series — Edition No. 2: ashrm.org/pubs/files/white_papers/SSE-2_getting_to_zero-9-30-14.pdf]. It is important to note that the outcome of the investigation is communicated to the patient. When the care was deemed to meet the standard of care and to have been reasonably provided, no compensation is offered and, if a claim is brought, the care is rigorously defended.

Other factors favorable to the success of the UMHS program is that under Michigan law there is a six-month waiting period before the patient can file a lawsuit. This provides time for the investigation and committee review to take place. Also, the committee’s review of the event is protected from legal discovery in that state.  After several years of refinement, UMHS reported a claims rate more than 25 percent lower after implementation of its program and a decrease in average monthly cost rates for total liability, patient compensation and non-compensation related legal costs (2).

However, limitations cited for the Michigan Model’s results include that the state of Michigan enacted malpractice reform with caps on noneconomic damages, a six-month mandatory pre-suit notice period and certain expert witness requirements that resulted in an overall reduction in malpractice claims statewide during the UMHS study period.(3) In addition, UMHS is a well- resourced, closed health system that employs its physicians and owns its own captive insurance company—giving it a degree of control over its providers and liability program operations that many healthcare organizations do not have.

CRPs: Successes and Challenges
Two different types of CRPs have evolved. One, an early settlement model, such as the Michigan Model, and another, a limited reimbursement model, which is much more limited in scope with payouts not exceeding a modest amount such as $30,000 to cover out-of-pocket expenses, daily loss of time and sometimes write-off of medical bills. With the limited reimbursement model, patients do not waive their right to sue, as they do with early settlement. (4)

While most, if not all healthcare organizations have implemented disclosure communication following medical error, there are few published reports about organizations that have implemented either type of resolution program or the effects of the programs on malpractice costs.  An exception is a Colorado malpractice insurance company COPIC and its limited reimbursement program called the 3Rs program — Recognize unanticipated events; Respond soon after the event occurs and Resolve any related issues.  After its first five years in existence, COPIC’s 3Rs program reportedly had a 50 percent drop in malpractice claims against its insured physicians and a 23 percent reduction in claim settlement costs. (5)

One reason for the dearth of published reports of cost savings with CRPs programs may be that CRPs take several years to fully implement and even more time to determine the program’s effectiveness in reducing malpractice claims costs. Even the UMHS program took seven to 10 years to demonstrate cost savings or a reduced rate of cost increases over time. However, programmatic results from early CRPs adopters offer some insights into success factors as well as barriers to implementing an effective CRP. Researchers that studied CRPs reported the following factors contributing to their success (6)

  • Executive leadership support and a key champion who is passionate about making the CRP work
  • Dedicated human, educational and system resources
  • CRP design based on the organization’s structure, culture and needs
  • Knowledge about regulatory compliance such as reporting requirements for the National Practitioner Data Bank and state medical/licensing boards
  • Readiness for gradual but transformational culture change that takes place over time in order to reap returns on investment in a CRP.

Other investigators of disclosure, apology and offer programs reporting on barriers and strategies for broad implementation offered several insights on CRPs. Although focused on Massachusetts, findings may apply in other states. The following are some of the key barriers to CRPs with possible solutions to overcome them. (7)CRP-barriers-solutions

Summary
Seventeen years after the IOM report on medical errors and institution of accreditation standards requiring communication of unanticipated outcomes to patients, the logical next step of compensating injured patients fairly and without undue delay when medical care falls below standard or was not reasonable under the circumstances has not been widely achieved. To date, there is limited evidence for the return on investment in CRPs, even with the positive results shared by UMHS about its early settlement model and by COPIC about its limited reimbursement model.

In today’s rapidly evolving healthcare environment, the need to demonstrate value in terms of safety and quality has never been more apparent. As payment for healthcare services based on performance increases, better outcomes become the expectation for patients and health insurers. Informed and engaged patients demand transparency as well as restitution when medical errors result in harm. As barriers are overcome, adding offers of fair compensation to disclosure and apology through formal CRPs, when care is deemed not reasonable or substandard, could ultimately become the norm. In 2017, the Agency for Research and Quality published the CANDOR toolkit (Communication and Optimal Resolution) to assist healthcare organizations in implementing CRPs (ahrq.gov/professionals/quality-patient-safety/patient-safety-resources/resources/candor/introduction.html). Risk managers are poised to take a leadership role in achieving safe and trusted healthcare and CRPs offer a structure and approach to work to that end.

Originally published in the ASHRM Forum newsletter, June 28, 2017: https://forum.ashrm.org/2017/06/28/communication-and-resolution-programs-where-are-we-now/ 

  1. The Michigan Model: Medical Malpractice and Patient Safety at UMHS. Retrieved from: http://www.uofmhealth.org/michigan-model-medical-malpractice-and-patient-safety-umhs
  2. Kachalia A., et al., (2010, August 17). Liability claims and Costs Before and After Implementation of a Medical Error Disclosure Program. Annals of Internal Medicine; 17; 153(4):213-21.
  3. Ibid.
  4. Mello, MM., et. al. (2014, January). Communication and Resolution Programs: The Challenges and Lessons Learned from Six Early Adopters. Health Affairs; 33(1):20-29.
  5. Boothman, RC, et. al., (2009, January).A Better Approach to Medical Malpractice Claims? The University of Michigan Experience. J Health Life Sci Law; 2(2):125-159.
  6. Ibid.
  7. Bell, SK, et. al. (2012). Disclosure, Apology, and Offer Programs: Stakeholders’ Views of Barriers to and Strategies for Broad Implementation. The Milbank Quarterly; 90(4):682-705.

Kathleen Shostek, RN ARM FASHRM CPHRM CPPS, is vice president, Healthcare Risk Management, Sedgwick

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lightbulb3-orangeOver the past several months there have been direct communications from the Centers for Medicare & Medicaid Services (CMS) that liability Medicare set-aside arrangements (LMSAs) were on the horizon. In this blog we commented on a February announcement from CMS to providers about LMSAs. In the middle of September, CMS released another notice to providers reminding them that Medicare beneficiaries must make out-of-pocket payments for services if they had a workers’ compensation MSA (WCMSA) or a LMSA. These were both strong indicators that a formal LMSA announcement was right around the corner.

Through our membership in the Medicare Advocacy Recovery Coalition (MARC), we were able to communicate with CMS that the LMSA rollout was premature. MARC was able to secure a meeting with CMS senior leadership in late September. We are thankful to CMS for not only having the meeting, but also listening to our concerns and recommendations. Several positives were achieved, including:

  1. CMS rescinded the September communication days after the MARC meeting
  2. CMS stated that no formal LMSA communication is imminent
  3. CMS will honor a promise it made to MARC in 2016 that it will confer with the industry before implementing any formal LMSA communication

A big thank you to our leadership at MARC and CMS leadership in reaching a consensus on the status of LMSAs. We will continue to share updates with our clients and partners as the move toward LMSAs progresses. In the meantime, please reach out to us with your questions.

Michael R. Merlino II, ESQ.
SVP of Medicare compliance and structured settlements

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Methadone is an opioid medication most commonly used for detoxification, maintenance treatment of opioid addiction, and limited use for chronic pain. The drawbacks to its use stem from the risk of addiction and abuse with the medication, even at recommended doses. Alarmingly, the Centers for Disease Control and Prevention (CDC) found that methadone is responsible for 30% of all opioid overdose deaths, despite the fact that it only accounts for 2% of opioid prescriptions. [1] Why are we seeing this trend and what can we learn about methadone’s risk july_overdose_pic08_580pxfactors to help increase awareness and patient safety?

Methadone has complex pharmacokinetics which results in a significantly longer half-life. The way it is processed by the body makes its pain relief duration much shorter than the length of time the drug remains in a person’s system. This requires the dosing three times a day, making the drug’s concentration build up in the body at a faster rate. The chronic dosing of methadone causes it to accumulate in the patient’s tissues, taking longer for the drug to be eliminated from the body and causing the tissue to slowly release methadone into the blood. This also makes the morphine equivalent dose of methadone increase at an exponential rate as subsequent doses are taken.

In a claim recently referred to Sedgwick’s clinical team, a patient was utilizing methadone for chronic pain. The patient was also taking Xanax for anxiety, oxycodone for breakthrough pain, gabapentin for neuropathy and cyclobenzaprine for muscle spasms. Individually, these medications might not draw alarm, but when we look at the therapy as a whole, there is great cause for concern. Along with the many adverse events that can be posed by methadone’s kinetic properties, methadone is associated with multiple drug interaction issues, due to it being metabolized extensively by liver enzymes. Using methadone in connection with alcohol, benzodiazepines (Xanax), antidepressants, barbiturates and other opioids (oxycodone) puts the patient at high risk for drug-related adverse reactions, such as respiratory and central nervous system (CNS) depression. The U.S. Food and Drug Administration (FDA) issued a “black box” warning in the summer of 2016, alerting physicians and patients against the combined use of any opioid and benzodiazepine due to the serious risks associated with their use.

Drug interactions are not the only thing we have to consider when dealing with methadone. The patient’s comorbidities can also pose complications. In the same case as noted above, the patient has sleep apnea, high blood pressure and is a current smoker. The drug interactions for the patient alone put them at risk for respiratory depression, but when mixed with comorbidities of sleep apnea and smoking, the risk for a negative outcome is far greater. Other comorbidities, such as cardiovascular disease, contribute to potentially fatal consequences, including CNS and respiratory depression, and cardiovascular effects such as swelling and QT prolongation, impacting heart attack risk.

This patient’s case may seem to be an outlier due to its complex drug interactions and comorbidities, but this is actually a common occurrence with patients escalated to methadone. Even with the dangers of methadone, it is becoming more popular to treat pain, partially due to its inexpensive cost compared to other opioids. Caution should be exercised when dealing with this medication, as there are clearly many variables that need to be examined to ensure the patient’s safety.

Dr. Andrew Newhouse, Sedgwick pharmacist

Reference:

  1. Trends in Methadone Distribution for Pain Treatment, Methadone Diversion, and Overdose Deaths — United States, 2002–2014 CDC / Morbidity and Mortality Weekly Report / July 8, 2016 / 65(26);667–671
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EBI-technical-647480_960_720_pbMany business owners make assumptions about what is included under their property policy. Property policies are designed to cover damage to equipment caused by external means; however, in the case of an internal malfunction, are you covered? Equipment breakdown insurance (EBI) may be critical.

Forms of policies

EBI is formerly known as “boiler and machinery” insurance. This coverage is provided in two forms of policies:

  • Standalone EBI policy
  • Combined property/EBI policy or EBI coverage added by endorsement – review your declaration page to determine if EBI coverage is added to a property policy

For an EBI policy to be triggered, you need to have an accident occur to an object.

These terms should be described in the policy. Here are the basics.

Accident

The definition of accident will list the perils insured or exclusions:

  • The EBI policy is not intended to replace regular maintenance of the building or equipment, but to cover unplanned events.
  • For the EBI policy to be triggered, the source of the accident would be from within the object/equipment.
  • A property policy would cover (subject to exclusions) damage to the equipment if it was from an external source (e.g. fire or water damage).

The EBI policy has typical exclusions to the definition of an accident as follows:

Accident shall not mean:

  • Depletion, deterioration, corrosion, or erosion of material
  • Wear and tear
  • The cracking of any part of a gas turbine exposed to the products of combustion
  • Leakage at any valve, fitting, shaft seal, gland packing, joint or connection
  • The breakdown of any vacuum tube, gas tube or brush
  • The breakdown of any electronic computer or electronic data processing equipment, unless used solely to control, operate, or monitor an object
  • The breakdown of any structure or foundation supporting the object or any part thereof
  • The sudden and accidental explosion of gas or unconsumed fuel within the furnace of the object or within the gas passages therefrom to the atmosphere
  • The functioning of any safety device or protective device *

Object

The object is also specifically described in the policy:

  • Object could be considered under the property policy contents or equipment, but typical property policy peril exclusions would remove coverages that fall under the EBI accident

Therefore, the excluded perils under the property policy are brought back into coverage under the EBI policy.

Standard property policies have peril exclusions that remove coverage and should be reviewed carefully. Some examples are as follows:

  • The standard exclusion of explosion in a property policy – this would fall under the definition of accident in standard EBI wording.
  • The property exclusion of mechanical breakdown – this excluded peril in the property policy is often brought back into coverage under the EBI accident

Summary

While it may appear that a property policy should cover equipment, upon closer review of excluded perils, it shows they are in fact, not covered, and instead should fall under an equipment breakdown insurance policy.

Therefore, an EBI policy is an important coverage for internal damage to equipment that may not be covered by the property policy. Keep this in mind as you review your own coverage.

Lee Powell, BA, CIP, CRM
Vice President, Complex Loss Division, Vericlaim Canada

*Source: Encon Group Inc. Specimen Endorsement

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LMSA-NFMSA-questionsOn September 1, CMS hired Capitol Bridge, LLC to be the new review contractor for MSAs. According to CMS employees that we’ve spoken to, the transition is currently underway. The old contractor is staying on for an indeterminate amount of time to help with the transition. We expect the transition will take anywhere from 60 to 90 days. Based on our prior experience with a change in MSA review contractors, this may have a significant impact on CMS approved MSAs.

First, we expect that CMS will soon announce a formal process for a Liability MSA approval process. You can read more about our concerns in our prior blog post: It is happening: LMSAs (and NFMSAs) are almost here.

Second, during the transition to a new review contractor we have to determine how long it is going to take to obtain CMS approval. Can the new contractor maintain the 30 to 40 day approval process that is currently maintained by outgoing contractor? Or will things slip back to the 6 month approval process we had to endure several years ago?

Third, and most importantly, how will the new contractor allocate for MSAs? Each prior contractor has had its own methodology of allocating MSAs. Will the new contractor’s methodology increase or decrease MSAs? Will the new contractor follow state law as required by the WCMSA Reference Guide? How will the new contractor handle the newly instituted Amended Review process?

It will probably take the industry about six  to 12 months to obtain concrete answers to these important questions. In the meantime, obtaining CMS approval will be an interesting endeavor as we all try to figure out the methods and processes of this new player in the MSA world.

Michael R. Merlino II, ESQ.
SVP of Medicare compliance and structured settlements

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A portrait of opioid use disorder

gardening-1645815_1280_pbRead part one of Rachel’s story here.

Rachel was once a vibrant gardener, grandmother and worker. Regrettably, following an injury, she became one of a growing number of those suffering from opioid use disorder (OUD). According to the Centers for Disease Control and Prevention (CDC), OUD has grown faster among women than among men in recent years. CDC VitalSigns reported earlier this year that every three minutes, a woman goes to the emergency department for prescription pain-killer misuse or abuse.

However, Rachel’s employer worked with a new claims administrator to implement a drug intervention program that utilized a data analytics tool designed to identify claims with adverse prescription drug trends. This tool quickly identified Rachel as at risk. Her case was flagged because of conditions including multiple prescribers, long-term opioid use, polypharmacy (the simultaneous use of multiple drugs for one patient) and a complicated drug regimen.

Portrait-of-OUD-CDC-callout

John, the new adjuster assigned to the case, agreed that a referral was badly needed. Reema Hammoud, PharmD, was assigned to review the case and put together a weaning plan. Rachel resisted because the pain she experienced was real and the withdrawal symptoms she had experienced when she previously tried to stop taking the opioids were intolerable. Dr. Hammoud identified two conditions of Rachel’s case: 1) analgesia, an opioid induced sense of pain that escalates pain sense and increasing dosage requirements over time, and 2) dependence, a state in which an individual only functions normally in the presence of the drug. When the drug is withdrawn, several physiologic reactions occur. This is known as the withdrawal syndrome. In the case of an opioid, withdrawal can be very serious and the abuser will use the drug again to avoid the withdrawal symptoms.

Rachel’s primary care physician read Dr. Hammoud’s assessment and weaning recommendations and agreed. Rachel’s resistance was extremely strong in the beginning, so John and Dr. Hammoud collaborated frequently.Dr. Hammoud advised Rachel of what to expect and recommended ways to deal with the withdrawal symptoms. Opioids dosages were slowly tapered to minimize withdrawals, and Aubrey, a nurse case manager, was assigned to provide pain coaching.

At the beginning of the weaning period, Rachel made dozens of threatening phone calls to John, Dr. Hammoud and Aubrey. However, over time and with team support, Rachel found that her motivation for self-improvement gradually grew, and John, Aubrey and Dr. Hammoud began to see Rachel emerge from her dependency. At the end of the weaning period, Rachel called each member of the team to say thank you for helping her get her life back.

Today, Rachel once again takes walks with her grandchildren, her garden is thriving, she has a new sense of awareness, and she is very grateful for her changed life.

As this example shows, employers can be societal leaders in the effort to eliminate the opioid epidemic, which is now officially a national emergency. Following a few simple steps can save and restore lives and close cases like Rachel’s:

  • Enact automated indicators to identify adverse drug trends.
  • Enable PharmD’s to provide expertise in developing weaning plans.
  • Connect the adjuster, any assigned nurse, and the PharmD to provide collaborative support.

Authorize only safe and appropriate prescription drugs via routine pharmacy utilization review.

Dr. Reema Hammoud, PharmD, BCPS, Director, Clinical Pharmacy 

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Homeowner_Storm-damageAs I write this blog, it is hard to believe that another catastrophic hurricane is approaching our shores. Like everyone else, I am still trying to grasp what happened in Texas with Hurricane Harvey.  I know all our hearts go out to those who have lost so much and have such a long road ahead to regain normalcy. I am proud of our colleagues and our contractor partners who are, and will continue, working tirelessly to provide honest support to those who need our services.

I want to share some tips – to help those recovering now, post-Harvey, and to those facing Irma’s potential threat – on what can be done to protect your property in the hopes that even just one person will take these precautions and need less post-recovery help.

Pre-storm tips

#1: Your safety is the number one concern

Please heed warnings to evacuate and head to a safe place. We have seen this time and time again where people think they can ride out a storm, resulting in serious consequences. We have also all seen instances where rescuers put their own lives in harm’s way to save those who do not heed warnings in time to evacuate.

#2: Things to check

  • Do you have adequate supplies on hand?
    • Food
    • Water
    • Medicines
    • Fuel for your vehicle or generator
    • Power sources such as chargers, pre-charged external power supplies, batteries
    • Contingency plans for pets (Your pets are part of the family. Do you have a plan for your animal friends?)
  • Are your facilities and home secure before you leave?
  • Have you stored important papers or documents in a waterproof, fireproof safety deposit box?
  • Do you have an exit route that will likely be safe? Do you know where you will go?

#3: Be mindful of personnel data 

Have contact information accessible for your own immediate family and, if you own or manage a business, your employees, including their phone number, text preferences, email address and their nearest relative.

#4: Know your insurance coverage

You should know what your coverage includes before a storm hits. It is important to review insurance coverage each year and make sure you are really covered for certain events. Many in Texas are finding out, unfortunately, that their policies did not include the needed flood protections to help ease recovery from the current unprecedented and unexpected circumstances.

Post-storm tips

#1: Protect your property

Take reasonable steps to protect your property from further damage. This could mean boarding up windows and salvaging undamaged items. Your insurance company can tell you what they will pay in order for you or a contractor to further mitigate damage.

#2: Start the cleanup

Always be careful when entering a damaged structure. If there appear to be serious structural issues, don’t enter, but rather contact local officials or professional contractors to assess the premises. Report downed power lines or gas leaks. Keep electricity turned off if the building has been flooded.

When starting the cleanup process, be careful, and use protective eyewear, gloves or other gear if available. Temporary repairs should focus on creating a safe environment and protecting your property from further damage. Cover broken windows, damaged roofs and walls to prevent further destruction.

Save receipts for supplies and materials you purchase. Keep damaged items or portions of them until the claim adjuster has visited, and consider photographing or videotaping the damage to document your claim.

#3: Select a contractor to help with recovery and repairs

You should talk with your insurance company about the coverage available for your loss and available resources for repairs. When selecting a contractor for emergency services, water mitigation and rebuilding, you should be careful to select a reliable, licensed and bonded contractor with experience in the specific type of work.

Be mindful of the rights and protections afforded consumers as they deal with recovery and repair. For example, the Texas Department of Insurance (TDI) released a Commissioner’s Bulletin on Hurricane Harvey – Recommending Building and Repair Contractors. The bulletin shares reminders about rules of misrepresentation, good faith claim settlement practices, as well as entitlement of those insured under a homeowners or dwelling policy to have their home repaired by a provider of choice. For additional TDI bulletins and information, their website is a continued, reliable resource.

Vericlaim Repair Solutions can assist you with finding certified contractors in your area by calling 800-587-4243, or you can submit a request through our website at www.vericlaimrepair.com.

Again, I want to emphasize that safety should be the most important thing to consider both pre- and post-loss. Buildings, furniture, personal effects and memorabilia are important, but most can be replaced or repaired. Your life cannot.

I am very grateful that our colleagues are able to help people as they work through these difficult times. It is never our desire to see devastating storms occur, but it is our honor to help in times of need. We pride ourselves on doing the right thing and, above all, showing that caring counts in all we do.

Please be safe and let us know how we can help.

Ed Reis, AIC, FCLA
President, Vericlaim Repair Solutions

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gardening-1645815_1280_pbRachel enjoyed gardening and canning vegetables. She enjoyed cooking, taking walks and spending time with her grandchildren. After she was injured at work, she was optimistic about making a speedy recovery. She was 53 years old and had always stayed active and healthy. But pain persisted with physical therapy so her primary care doctor prescribed cyclobenzaprine, a muscle relaxant, along with tramadol, an opioid for pain. Diagnostic tests occurred and surgery followed.

Then, Rachel’s neurosurgeon prescribed hydrocodone/APAP 5-500 mg, another opioid, twice daily. A drug reassessment was not done and, with now two prescribers, she was taking more than one opioid. Years passed with persisting pain and another prescriber added to the mix without drug reassessment across prescribers. Rachel was now on a pain regimen that included multiple opioid pain relievers, including Fentanyl patches for chronic pain.

Rachel’s morphine equivalent dose was 225 mg per day. Guidelines recommend that dosing not exceed 50 to 90 mg of morphine equivalents per day. According to the Centers for Disease Control and Prevention (CDC), someone like Rachel with a drug regimen over 100 morphine equivalents per day faces more than nine times the risk for overdose compared to patients taking 20 mg or less of morphine (or an equivalent) per day. Moreover, Rachel’s daily pill burden increased her risk of overdose because she sometimes forgot the number and combination of pills she was taking from day to day. Also, her sense of pain was sometimes so severe that she would take more than the prescribed number of opioids.

Rachel’s garden was now overgrown from lack of care and her grandchildren had become alienated by her despondency. She was suffering from a condition that nobody had ever told her about. She had opioid use disorder. Opioid use disorder (OUD) is a typically chronic, relapsing illness in which patients misuse prescribed, diverted or illicitly obtained opioid medications. Unfortunately, Rachel’s condition was not unique. In 2016, the CDC says that 26% of patients within the U.S. health system who had been prescribed opioids for more than 90 days met the criteria for OUD.

Portrait-of-OUD-CDC-callout

In our next blog, I will tell the rest of Rachel’s story and share steps that can be enacted to prevent unnecessary suffering and death.

Dr. Reema Hammoud, PharmD, BCPS, Director, Clinical Pharmacy 

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wc-savings-freepikWorkers’ compensation is a “no fault” system. Every state has laws and regulations mandating the prompt reporting of all injuries and accidents. Most of these laws are in place to protect the rights and benefits of injured workers. What many employers do not realize is that immediate reporting of all injuries can actually be a magic bullet that helps reduce their workers’ compensation costs.

Barriers to reporting

A significant barrier to reporting of claims is the economics of workers’ compensation. Workers’ compensation claims are expensive. In some organizations, the losses can impact the company’s experience rating modification and coverage costs, impact the company’s risk management budget, reduce the profitability of the division or can impact the bonuses of the front-line supervisors and managers. As a result, an unintended message can be sent to workers that they are discouraged from reporting accidents.

Economics of delayed reporting

Employers can face additional fines and penalties for late reporting, but that is not the only economic impact of delays. In a recent study, the National Council on Compensation Insurance (NCCI) showed that delayed reporting can increase workers’ compensation claims costs up to 51%. The study also reported that the longer a claim goes unreported, the more likely it will be to involve litigation, also increasing overall claims costs.

Safety (investigation)

One of the most important benefits of immediate reporting is the ability to determine where there was a safety program failure and what could’ve been done to help prevent the accident.  Forensic analysis of all accidents helps employers significantly reduce their claims frequency.

Compensability (investigation)

In workers’ compensation, few things are more vexing to employers than believing a claim is not legitimate, yet it is accepted as compensable. Delays in reporting of claims can make it significantly more difficult for the claims administrator to accurately determine if the claim is legitimate. As time goes by, potential witnesses may not be identified, witnesses’ memories become fuzzy, hard evidence can be spoiled. There are differing statutes of limitations in each state. If claims are not reported to the claims administrator immediately and denied within the appropriate timelines, it is possible that some will be considered compensable as an operation of law.

Improved medical control and better medical outcomes

Immediate reporting of claims improves the timeliness and quality of medical care. This helps reduce the number of lost time days, as well as reduce the exposure for permanent disability. In many jurisdictions, it is possible that delays in providing care can void the employer’s control of medical care. Providing quality care at the right time also helps reduce litigation rates.

Prompt and accurate benefit provision

Immediate reporting allows the claims administrator to provide prompt, accurate benefits to injured workers. This signifies to the workers that the employer cares about their health and safety and reduces the potential for litigation.

Subrogation

Immediate reporting allows the claims administrator to identify potential subrogation cases and preserve evidence involving a third party.

OSHA compliance reduced

Immediate reporting of all injuries increases the ability for the company to comply with Occupational Safety and Health Administration (OSHA) reporting requirements and avoid exposure to penalties and fines.

Operations best practices

What should employers do to encourage prompt workers’ compensation claims reporting, speed recovery and avoid increased friction and costs?

  • Establish a precedent: Upon hiring, as part of the intake process, educate every employee that they are required to report all injuries immediately.
  • Message from the top: The chief executive and management staff should regularly reinforce the importance of prompt reporting of all injuries.
  • Revisit financial incentive programs: Look carefully at financial incentives within the organization which might unintentionally cause a delay in the reporting of claims. If there are charge-back programs in place, it might be wise to increase the charges for late reporting and lower the charges for claims which were reported immediately.
  • Analyze gaps: Any delayed reporting should be analyzed to determine if there is a gap in the education process. Treat these cases as an opportunity to educate.

William Zachry, Senior Fellow, Sedgwick Institute

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trip-fall-24108_1280pbIn a recent License Appeal Tribunal (LAT) decision between a claimant and TD Insurance Meloche Monex (D.S. and TD Insurance Meloche Monex #16-000131/AABS), it would seem the stranger the circumstances, the wider the allowance to access Ontario accident benefits. This most recent decision (which is final, no appeal possible) has determined that running along the sidewalk, tripping and striking a parked car is now deemed an “accident” by definition.

In this case, the injuries are catastrophic in nature. The man involved had consumed alcohol and was running home in the early hours of September 27, 2015. He ran onto the lawn of a private residence, tripped over stone blocks, lost his balance and fell head first towards a car parked in a driveway. There were no witnesses to the incident. The claimant sustained severe injuries, including paralysis below the armpits, complete loss of bowel and bladder control, difficulties swallowing along with facial lacerations and fractures.

According to the claimant, he struck his face and body against the parked car and this entitled him to statutory accident benefits issued under an Ontario automobile policy. The insurer, TD Insurance Meloche Monex, took the position that the definition of “accident” had not been met. They indicated that the injury stemmed from a fall against the pavement and this caused injuries.

Experts opined on the various bio-mechanics of the fall, the vehicle, the claimant, etc., but at the heart of the decision was the definition of “accident” itself. The policy defines “accident” as:

“An incident in which the use or operation of an automobile directly causes an impairment or directly causes damage to any prescription eyewear, denture, hearing aid, prosthesis or medical/dental device.”

Prior case law was reviewed, Amos v. Insurance Corporation of British Columbia, which outlined the Purpose and Causation Test. Did the accident result from the ordinary and well-known activities to which automobiles are put? And was there some causal relationship between the claimant’s injuries and the ownership, use or operation of the vehicle, or was it merely incidental or fortuitous?

The LAT decided that the expert reports were sufficient to determine that the claimant struck the vehicle which caused his injuries. Regardless that the vehicle was parked and the claimant was running, tripped, and fell, the LAT determined that this incident does meet the definition of “accident” and allowed the claim to be advanced for statutory accident benefits, which could top $4 million over the claimant’s lifetime (depending on the eligibility for disability benefits). It is unclear if a tort claim was being advanced in this incident.

Lesson learned: Park vehicles in a garage.

Laurie Walker, CIP, CRM
SVP, Director of Operations, Canada