Workers’ comp: The questions you don’t ask could have costly answers

I am the first to admit that sometimes I make a mess of things. I try to teach my kids that the best reaction is to ‘fess up, take responsibility, fix what I can, learn from my mistakes and move on.
Well, I made a big one. A multi-thousand dollar one. Though, honestly, I don’t see what I could have done differently with the information I had.
This mess I lay squarely in the lap of the Workers’ Compensation Group Rating Program that covered our farm.
A little history. My worst nightmare is someone getting hurt on the farm. Having all the cows get out or trying to pull giant bull calves out of first calf heifers pale in comparison.
Unfortunately, all three have happened over the years.
Our farm has been enrolled in workers’ compensation for more than 18 years. We have had two claims. When a farmer’s organization announced a group rating program, we happily enrolled.
The group rating program system is a big benefit to small businesses. It allows a third party to bring together small employers engaged in the same business to create groups that can achieve substantial savings in workers’ compensation premiums. These savings are not available to individual small businesses.
Farms grouped. Groups are put together to achieve different levels of premium savings. Premium discounts can range up to 95 percent.
Farms are grouped based on their claim histories. The classification for most dairy farm labor has an assigned workers’ compensation premium in the 25 percent range. That means that for a six-month payroll of $30,000, the premium would be 25 percent of $30,000 or $7,500.
If you are in a group with a 90 percent rating, then your premium rate would be discounted by 90 percent. Therefore, the $7,500 payment becomes $750.
If you are enrolled in a 50 percent group, the premium for a six-month payroll would be $3,750.
How I blew it. In 2000 we had an employee break a hand during milking. Fortunately, the employee’s hand healed well.
The day after the accident, I called both the group program and workers’ compensation and started the process. I had two goals: do right by the employee and do everything right so we didn’t mess things up for the farm.
The first was achieved, the second wasn’t.
In all discussions with both the group and workers’ compensation, my clearly stated questions were: What do I need to be doing to get things done right for the employee and for the farm.
Hidden cost. Not once, in any conversation did anyone, particularly the group program, suggest we should pay the employee ourselves, rather than do this through workers’ compensation.
“Lost time” claims have a huge impact on your claims’ history. If you have a claim for medical expenses, but little or no “lost time” or wages paid by workers’ compensation, or a claim that involves both, the claim with both will have a much greater impact on your workers’ compensation group rating status.
Had we been told this, we would have paid the employee to sweep one-handed or sit in a chair. I am not being callous, do the math and you will see why this should have been brought to our attention.
The total cost of the broken-hand claim in 2000 was $2,278.59. A little less than half was medical expenses, the balance was wages.
At that time we were in a 95 percent rating group.
Lingering impact. In 2004, the real financial impact of this claim hit.
I am still not entirely clear how the ratings are calculated. The customer service people at both the group program and the group sponsor feel we farmers are incapable of understanding the “complicated equations” and don’t share them.
The dollars, however, are easy to understand. From February of 1994 until December 1 of 2003, nine years, our farm paid a total of $8,517 in workers’ compensation premiums and Gates McDonald Group Rating Enrollment fees.
There were years of lower payrolls than we currently have, and years when there were up to 80 percent premium rollbacks through the bureau.
In 2004, the total was $5,947.
Each of the six-month premiums were more than the entire original claim in 2000.
There have been (thank God) no new claims. The 2000 claim is done and closed.
These payments also reflect the 20 percent premium rollback offered by workers’ compensation in 2004.
Assuming we would have been in an 80 percent group if we had kept the employee on our payroll, we paid $5,000 more in 2004, nearly twice the cost of the total original claim in premiums we should not have had to pay if the group program had done its job.
We are looking at one more year of similar premiums, although we have applied to another group with a 15 percent better group rating.
Digging out. Last year, the rating group dropped the farm into a 50 percent group.
This year, one year further from the 2000 accident – and one more year without an accident – they offered an even poorer group rating, a 45 percent group.
Why? Good question, which neither the group nor the sponsor feels compelled to give a straight answer to.
Don’t make my mistake. I am told that the new group does a “lost time analysis” early on for each claim. Is there an alternative job the employee can do? Should the farm continue to pay wages themselves?
Would it be best for the whole situation to be handled through workers’ compensation?
This analysis can save the farm thousands and thousands of dollars.
Another option. Another program is available through workers’ compensation called the 1K program. The employer must enroll in the program before a claim occurs.
In this program, an employer can pay all medical expenses up to $1,000 if no more than seven days of work are lost.
The accident will not be part of the employer’s workers’ compensation history. Larger claims must go through workers’ compensation. (But ask those questions!)
This program is worth thinking about. So is putting together a list of pertinent questions to ask if you have a claim on your farm. Don’t think the group program or its sponsor is watching out for you.
The questions you don’t ask can cost you a bundle. Hopefully someone besides me can learn from my mistake. Now I need to work at moving on.
(The author is the northeast Ohio district dairy specialist with OSU Extension. Send comments or questions in care of Farm and Dairy, P.O. Box 38, Salem, OH 44460.)