Reining in Comp’s Transition Costs

One TPA Says It Has the Secret

At first glance, Jeffrey McDaniel does not seem disabled. He is built like a football player, and in his mesh green and gold jersey he looks like one too. A pat on the back reveals his muscled frame, the one that helped him excel for 13 years as a dock worker for a leading commercial trucking firm in Northwest Indiana.
It was work he did with pride and for which he earned a good wage, $17 an hour.

“I only overloaded twice in 13 years,” McDaniel told Insurance Journal. “Stack it high and tight. You have to know what you’re doing.”

But one day in July 1998, McDaniel was lifting a 70-pound box when his hand went right through the bottom. The box fell apart and McDaniel tore a tendon in his wrist. After surgery to repair the tendon and a year in physical therapy, McDaniel was cleared to return to work. He worked without incident for a year before he reinjured himself while flipping a box. A second surgery, this one on his elbow, followed.

McDaniel’s doctor told him his injuries meant he could never return to dock work or any similarly demanding physical labor. He has the scars to prove it.

A solution to the severity crisis?

The case of Jeffrey McDaniel — a pseudonym; his employer didn’t allow IJ to use his real name — illustrates a great deal about the challenges faced by the workers’ compensation system. While the frequency of comp claims is down, the severity of those claims has gone up, according to estimates from the National Council of Compensation Insurance. And in the long-tail cases like McDaniel’s, employers and insurers are on the hook for the medical and indemnity costs.

A host of third-party administrators have tried to tackle the problem using techniques such as case management by nurses, but one Deerfield, Ill.-based claims consulting and management company says it has the secret to helping injured workers return to work faster or settle their cases, saving everyone time, money and grief.

The outfit is the Workers Transition Network (WTN), a division of the LewisCo Group, and its re-employment program targets workers like McDaniel by offering them an opportunity to return to work for nonprofit charitable organizations, which can accommodate workers’ medical restrictions while boasting a nonthreatening working environment that can help build self-esteem.

WTN Vice President James Kremer said that 90 percent of the claims the group accepts are resolved, and the return-on-investment runs between four- and five-to-one. The re-employment services program, which targets workers whose permanent medical restrictions make it impossible for them to return their old line of work, is really only practical in 15 states across the country, Kremer said.

Mandatory vs. voluntary rehab

It’s those states — Maryland, Michigan, Pennsylvania, Virginia, Alabama, Delaware, District of Columbia, Illinois, Louisiana, Maine, New Hampshire, North Carolina, Ohio, Oregon, Rhode Island — that mandate vocational rehabilitation and force injured workers to choose between WTN’s program and continued benefits.

Even when claimants decide to take the matter of court, they are rarely successful, according to Kremer.

“Less than 1 percent of all of our cases have ever gone before a judge, and our clients have won 100 percent of those cases,” he said. “This is almost a velvet hammer for individuals who want to milk the system, who may be perfectly happy at home sitting on their couch and cashing a check. If the doctor approves nonprofit placements close to where they live, it’s hard to go in front of a law judge or arbitrator and explain why the program is not doable.”

Editor’s note: To read the rest of this story, see the March 22 issue of Insurance Journal Midwest, which covers Ohio, Michigan, Indiana, Wisconsin, Illinois, Missouri, Minnesota, Iowa, North Dakota, South Dakota, Nebraska and Kansas.

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