May 2016

***This article is part of a series.  If you haven’t read from the beginning please start here: WC 2.0- The Work Comp Claims Managment Program.***

In the previous post, we explained the nuts and bolts of lost time claims. There is a great deal more to discuss and understand regarding lost time, but for now the general overview will suffice.

This post will deal with the other two most common ways claims go from Medical Only (MO) to Indemnity- Permanent Impairment and Settlements.

Permanent Impairment- The correct term for this is Permanent Partial Disability. This is a situation where an injured worker (IW) incurs some sort of permanent change in their physical status that will hinder them in some way forever. An example may be a shoulder surgery that results in reduced mobility in the arm. Another might be an injury to the eye that affects their vision irreparably. These injuries are rated by making very specific measurements and assigning a percentage of impairment compared to the “whole body” concept. In the example above, a shoulder surgery may result in a 3% diminishment of the whole body, due to the reduced range of motion. There is a chart and formula for virtually every body part that could result in a permanent impairment and the specific measurements that must be made to determine the correct percentage. For more information on the specifics of this rule book, please check out the 1996 FLORIDA UNIFORM PERMANENT IMPAIRMENT RATING SCHEDULE:

After the percentage of disability is assigned, the insurance company then makes a lump sum payment to the IW, to allow them to close the claim (otherwise they would be paying a very small amount on the claim as long as the IW lived; hardly practical). The formula is 2 weeks of Average Weekly Wage for every 1% of impairment up to 10%, 3 weeks AWW for every 1% impairment from 11%-15%, 4 weeks AWW for 16%-20% and 6 weeks for 21% or higher.

For our purposes, what you need to know is that Permanent Impairment payments are made out of the indemnity “bucket” and any amount paid results in the claim going from MO to indemnity. As a general rule, these are out of our control. They are assigned by doctors based on the rating schedule above. If we feel a claim has a high degree of probability of going to surgery, we usually recommend the owner turn the claim over to the insurance carrier fully. There are some exceptions to this, but that is very claim specific.

This is a good time to mention something that is VITALLY IMPORTANT: Every claim is different; every injury, every worker, every company, every insurance carrier, every doctor. This is why partnering with someone with experience is so vital. Every claim must be managed individually to achieve the best outcome for the IW and the employer. The goal for the IW is always the same: get them the best medical treatment available, treat them with respect and care, get them back to work as soon as possible and see that they are paid for their time out of work. The goal for the employer is to accomplish this at the lowest possible cost. That is where our program and understanding how the Experience Mod really works helps the employer achieve that goal.

Ok, back to the final common type of indemnity.

The final, common form of indemnity claim is one that is closed through settlement. The majority of these are a result of the IW hiring an attorney. These almost always result in a settlement of some sort and those dollars are always, at least partially, paid out of the indemnity “bucket”. (Note: On 4/28/16 the Florida Supreme Court ruled that the attorney fee schedule in the FL WC law is unconstitutional. This will require the legislature to address it quickly. It is unknown at this time the impact this will have on WC rates, but it is assumed that this will result in more litigation and higher rates. I will address this in detail in the next post.)

Claims can also be settled at the request of the insurance company without attorney involvement. This occurs when an IW has received treatment for the injury, but has not reached Maximum Medical Improvement and the insurance company does not feel that continued medical care will produce a positive result in a reasonable period of time. They feel it makes more sense to offer the IW a lump sum to cover expected future medical costs and allows the carrier to close the case. These are often contentious situations between the IW and the employer, so it is vital that the employer obtain legal counsel to navigate this type settlement. Much more on this topic in future posts.

If a case settles, it will be an indemnity claim and cost you substantially more than a MO case. The good news is; the vast majority of these can be avoided by utilizing our system. Clients who follow our program have an extremely low incidence of settlements; far below the norm. There are good reasons for that and I will get into it in detail in future posts.

This is not a perfect science, however. It is a program that educates you on the proper ways to structure your business and manage your WC claims to minimize your WC costs. Lost time is something we can affect in many cases, permanent impairment we can’t, settlement we can reduce to a very small number. Combining these techniques will result in the lowest Experience Mod your company can achieve, given the losses that occur. Not utilizing them will insure that you will end up with the highest Experience Mod possible given your losses. Which one would you prefer?

Next blog post:
WC 2.6- Supreme Court Cases That Affect YOU (Coming soon!)

Please join our email list by filling out & submitting the form in the blue box on the right of this page and you will receive each blog post as it appears on our website. Feel free to call me at any time- Joe Carraher- W: 239-280-3209 or on my Cell: 239-293-7772.

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***This article is part of a series.  If you haven’t read from the beginning please start here: WC 2.0- The Work Comp Claims Managment Program.***

Hopefully, you have read the first three blogs; if not, please go back and do so. This will be much more meaningful.

In blog 2.2, we gave a brief overview of the two major claim categories- Medical Only (MO) and Indemnity. In blog 2.3, we showed how much an indemnity claim can cost you, compared to a MO claim. Logic dictates that we should do everything in our power, within the bounds of the Work Comp law, to minimize indemnity claims. Luckily, there are tools and strategies that can do this, if you know how and when to implement them. That said, there are losses that we cannot keep from indemnity classification. The next two blog posts will make it clear what we can and can’t do.

WHAT WE CAN DO: This will revisit the three types of indemnity claims explained in blog 2.2 and explain what our system does with each.

LOST TIME- On the 8th day out of work the carrier will begin paying the injured worker (IW). They will pay 66 2/3% of their Average Weekly Wage (AWW) for as long as they are unable to work. If they are out of work for over 21 days, they will be compensated for the first 7 days as well. If ONE DOLLAR of lost time is paid, the claim becomes an indemnity claim and consequently 100% of the medical costs will be used in calculating your Experience Mod and hence, your WC premiums.

These lost time claims fall into two main categories- large claims, known as shock claims and smaller claims that last for anywhere from a few days to a couple months. The simple truth is there is nothing we can do about shock claims. If a person falls from a roof and breaks their back, they are going to be unable to work for a very long time and that is why WC insurance exists; to pay their medical bills and help them with ongoing income while they are unable to work. It is why you as an employer have insurance, as no business is prepared for a large, long term loss without the help of an insurance company. Shock claim- turn it over to the insurance carrier and be thankful they are there.

Most lost time claims, however, are NOT shock claims. They are short term out of work situations. This we frequently CAN do something about and the math is very compelling. Companies that generate $40,000+ in WC premium, it is almost always worth making an attempt at keeping a claim from going to indemnity because of lost time.

There are two ways an employer can prevent a claim from paying lost time. The best and most common way is to bring the worker back to work within those seven days. This is commonly referred to as Return to Work (RTW); I prefer the term Recover at Work and will explain why in a future post. There are many good reasons for making a serious effort as a business to make a RTW policy the default approach to any WC claim that appears to have the possibility of lasting more than 7 days, i.e., going to lost time.

The most obvious reason to embrace RTW is that it has the potential to save you a ton on money on WC premiums. But it is also a great thing for employee morale, for both the IW and other employees. Actions speak louder than words and going out of your way to take care of your employees when they are injured speaks volumes to your entire workforce. Frequently, RTW may require a part time job posting in another position or involve some physical limitation or mechanical accommodation. Large companies will do almost ANYTHING to avoid lost time claims and there are entire industries created around assisting IW’s in whatever ways necessary to continue employment during their period of recovery. Small to mid-size companies may not have those types of resources to devote to a RTW program, but they absolutely can develop intelligent, effective policies that will not only help their IW, but save them huge premium dollars over time.

The second strategy for avoiding lost time claims involves something called wage continuation. This is actually the most powerful weapon in the arsenal, but it is one that has some controversy surrounding it. Basically, Florida law allows for an employer to continue paying an injured employee in lieu of having the employee be paid by the insurance company in the formula described above. The math is clear: most times it is substantially less expensive to continue paying an employee, rather than suffer the increase in your Mod and premiums that result from an indemnity claim.

There are issues involved in this, however, and I highly recommend that anyone considering this course of action contact me directly before doing so. There are minimum amounts you must pay, different ways of handling wage continuation depending on which insurance company you are using, understanding NCCI’s stance on this and much, much more. It is a very powerful option and I am strongly in favor of using it when appropriate, but please do not utilize it without complete knowledge of the issue.

In a future blog post I will go into detail about something we call Actionable Intelligence. That is a service where we utilize the WC software programs we have to give employers a real time estimate of what a given claim could potentially cost them, based on the type of injury, the amounts reserved by the carrier and the employer’s specific premium level and loss history. This not only shows the potential cost of the claim as reserved but we do a calculation of the cost if even $1 of indemnity is paid! You will be amazed at these calculations. Furthermore, it allows owners and managers to make business decisions based on REAL NUMBERS; hence the name Actionable Intelligence.

In the next blog post we will review the other two primary causes of indemnity claims- Permanent Impairment and Settlements. The picture is not as rosy with these two types, but it is still something you need to know.

TL;DR- Takeaways- Lost Time claims are the most common type of indemnity claims. Large claims (shock claims) cannot be avoided; that is why you have insurance. Smaller claims, however, can be managed to avoid indemnity and keep them classified as Medical Only. EVERY employer who generates a Mod and significant premiums should be aware of the tools available to them to manage these claims and partner with an agency that provides this service.

Next blog post:
WC 2.5- What We Can and Can’t Do- Part Two

Please join our email list by filling out & submitting the form in the blue box on the right of this page and you will receive each blog post as it appears on our website. Feel free to call me at any time- Joe Carraher- W: 239-280-3209 or on my Cell: 239-293-7772.

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***This article is part of a series.  If you haven’t read from the beginning please start here: WC 2.0- The Work Comp Claims Managment Program.***

This is the blog that will show you just how much indemnity losses cost you. The numbers are UNBELIEVABLE …literally. It does not seem possible that the formula is structured this way, but it is. If you do not have someone paying attention to your claims, you can pay 10’s or 100’s of thousands of dollars more than necessary in WC premiums. This blog will show you actual cases that illustrate that.

First, one quick point for you to ponder- For the majority of claims, WC insurance is not really insurance at all, rather a FINANCING MECHANISM for your losses. The exception to this is large claims, known as shock losses. When they occur, your WC coverage truly is insurance, as it protects you from catastrophic financial loss.

This article will show you the massive difference to your pocket book an indemnity claim makes versus a medical only (MO) claim. If you have not read the previous post- WC 2.2 Types of Claims- Medical Only vs. Indemnity. I highly recommend you do so before continuing.

Ok, to understand the huge discrepancy between the two types of claims, we need to understand a little history. Decades ago, there was no difference between indemnity and MO claims. But this ended up with unexpected consequences. NCCI, the National Council on Compensation Insurance (the people who gather data on every claim, develop your specific Mod and most states WC rates), found that employers were not reporting small claims. They were simply paying them directly and not reporting them to the insurance carrier. This was unacceptable to NCCI, as their primary function is to compile data on all claims and use that to produce statistically appropriate rates. The data was becoming skewed.

Their answer was to use a carrot in the form of the Experience Rating Adjustment or ERA. This adjustment has been approved by 33 states, including FL, and it states that the dollar amount of Medical only claims will be reduced by 70% when calculating your company’s Experience Mod. This means if you have a $5,000 MO claim, only $1,500 would be used in your Mod calculation…very minor impact compared to $5,000.

Now the kicker. If your claim becomes an indemnity claim, not only does the claim increase due to the indemnity payout, but 100% of the medical costs are included in your Mod calculation! Goodbye carrot, hello stick.

The best way to understand the impact of this is to see a few real world claim examples. These are cases that occurred with current clients BEFORE they moved to our agency. Our system of claims management eliminates nearly all of these type situations:

Case #1- Large AC contractor, generally has about 35-40 claims per year. Annual WC premium around $570,000 per year when these claims occurred. Here are a few claims that illustrate the above dramatically:



Indemnity Paid

$ 77



3 Yr. Increased Prem.


What is this saying? The Indemnity Paid is the actual amount the insurance company paid in Lost Time, the Medical is the actual amount paid in medical costs and the 3 Yr. Increased Premium is the amount the employer paid in INCREASED PREMIUM over the next 3 years BECAUSE it was an indemnity claim as opposed to a Medical Only claim!!! Don’t get me wrong, they will still pay a higher premium if it was a MO claim, but the medical amount would be reduced by 70%. The 3 Yr. figure shown above is the ADDITIONAL PREMIUM OVER AND ABOVE THE MEDICAL ONLY COST THEY WILL PAY. Staggering. This particular employer had at least 10 claims like this over the 2 year period prior to becoming our client that. I believe we could have saved them $243,073 in premium by utilizing our claims management system…real money in anyone’s book.

Case #2- Home Repair Service, has about 10-15 claims per year. Annual WC premium around $150,000 per year when these claims occurred.



Indemnity Paid




3 Yr. Increased Prem.


Case #3- Paving Contractor, has maybe 2-3 claims per year. Annual WC premium around $50,000 per year when these claims occurred.



Indemnity Paid




3 Yr. Increased Prem.


Case #4- Hotel, has 2-3 claims per year. Annual WC premium around $23,000 per year when these claims occurred.



Indemnity Paid




3 Yr. Increased Prem.


I show you these because they illustrate the absurd amount of money in additional premium you will pay when a claim goes to indemnity rather than staying MO. And this is true of ANY employer who generates a Mod. Obviously, the higher your premiums, the larger the impact, but that $7,809 increase for that small hotel owner was probably more hurtful than the $27,729 hit the large AC contractor experienced!

The good news is there are effective tools out there to eliminate those senseless claims that cost you thousands because a small amount of indemnity is paid out.

This is why I have developed this program. I think this method of calculating Mods is crazy, but it is the WC system as it currently exists. Crazier still, I have not met a small to medium sized employer who is aware of these rules. They simply file their claims expecting their insurance to cover it (which it does) and go on with their business, having no idea of the penalty they will incur or the fact that there are ways they could have prevented it.

I have become an evangelist about this because I believe EVERY employer in Florida who develops a Mod should be aware of this and what they can do to protect themselves.

There is MUCH more to learn on this topic and I will be posting another 40 or so blogs on the topic, but if you see the value of what I am saying please call me at 239-280-3209 or my cell at 239-293-7772. Or email me at and I will be happy to explain all of this and more In greater detail.

TL;DR Takeaways- Indemnity claims cost you dramatically more than MO claims. The math is unbelievably unfair in many cases. There are tools you can use to avoid getting pummeled by this system. I believe every employer should know about this and be able to manage their claims accordingly.

Next blog post:
WC 2.4- What We Can and Can’t Do- Part One

Please join our email list by filling out & submitting the form in the blue box on the right of this page and you will receive each blog post as it appears on our website. Feel free to call me at any time- Joe Carraher- W: 239-280-3209 or on my Cell: 239-293-7772.

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***This article is part of a series.  If you haven’t read from the beginning please start here: WC 2.0- The Work Comp Claims Managment Program.***

There are many types of claims, but for our purposes we will focus on two broad categories that constitute the vast majority of WC cases. They are Medical Only (MO) and Indemnity.

Medical Only: This type of claim is exactly as it would appear; the only payments made by the insurance company are medical bills and expenses involved in processing the claim or providing the medical treatment for the injured worker (IW). The majority of claims are medical only (MO). Employee gets hurt, claim is reported to the carrier, employee receives treatment and insurance carrier pays 100% of the bills associated with the claim.

This is a good time to introduce a couple vital points: First, it should always be the goal of the employer to obtain the very best medical treatment available for their injured worker. Medical bills are paid at 100% and are unlimited. This is NOT an area where we should attempt in any way to “save” money in the claims process. Second, our ultimate goal is to get our IW back to work as soon as possible, therefore the best medical treatment is what we want in furtherance of that goal.

Indemnity: This is the second broad category of claim and it most commonly encompasses one of three types of payment by the insurance company that result in it being categorized as an indemnity claim. There will, of course be medical bills associated with the claim as well.

Here are the three most common reasons a claim becomes indemnity:

Lost Time- In Florida, if an IW is out of work for more than 7 days, on the 8th day the insurance company will begin compensating them for lost income. They will request a wage statement from the employer showing their income for the 13 weeks prior to the injury, they will take the average for those past 13 weeks (Average Weekly Wage-AWW) and the IW will be paid 66 2/3% of that number for time missed. This is the law and insurance companies are monitored closely to assure that they are paying IW’s fairly and promptly. (There are MANY details and what if’s that surround lost time, but for now, let’s keep it simple). If even $1 of lost time is paid on a claim, it goes from MO to indemnity.

Permanent Impairment- When an injury is serious enough that it causes permanent damage to an IW, they are entitled to receive compensation for that. Frequently, this will be a result of surgery that may limit the IW in some way such as ability to lift, range of motion, etc. These impairments are measured on a percentage basis and can cover virtually any area of the body, internal or external. The percentages are dictated by tables that guide physicians in assigning the appropriate percentage of permanent disability based on the individual injury or injuries. Any payment made as a result of permanent impairment automatically moves a claim from MO to indemnity.

Settlements- The third most common way for a claim to move from MO to indemnity is through a settlement. They fall into two categories: Claims with attorney involvement and those without. If an attorney is engaged by the IW to represent them, the case almost always results in a settlement of some sort. The second category is when the insurance company feels that all has been done to help an IW and, in the interest of closing the case, offers the IW a settlement to cover any future medical or other financial costs arising from the injury. Again, if a settlement of any type is paid to an IW, the claim is moved from MO to indemnity.

This is a very cursory and uncomplicated treatment of medical only vs. indemnity, but it is vital that you understand the distinction. We will deal with each of these in detail as we build upon the knowledge required to properly manage your WC claims. Because in this, as in so many legal/financial/insurance/HR related issues, the devil is indeed in the details.

Now that you have this as a foundation, please move on to the next blog post. That is truly where the rubber meets the road when it comes to saving money on your WC costs. The MATH of this will astound you and prove to you the VALUE of developing a plan and partnering with someone who can make certain you don’t fall victim to a system designed for you to do just that.

TL;DR-Takeaways…There are two main types of WC claims- Medical Only (MO) and Indemnity. MO is when only medical bills are paid, indemnity is when other types of payments are made in addition to medical bills. In the next post you will be shown the huge financial impact the difference between these two types of claims can have on your Experience Mod and WC premiums.

Next blog post:
WC 2.3- How Indemnity Impacts Your Premiums- The Math

Please join our email list by filling out & submitting the form in the blue box on the right of this page and you will receive each blog post as it appears on our website. Feel free to call me at any time- Joe Carraher- W: 239-280-3209 or on my Cell: 239-293-7772.

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***This article is part of a series.  If you haven’t read from the beginning please start here: WC 2.0- The Work Comp Claims Managment Program.***

The Work Comp world has changed. For decades WC was sold on the basis of who had the best dividends. When rates were more than double what they are now, not reporting claims and maximizing dividends just made sense.

Not anymore. Now the most critical objective is to KEEP YOUR EXPERIENCE MOD AS LOW AS POSSIBLE. New mantra: Take care of your Mod and the dividends with take care of themselves.

This blog is dedicated to those concepts, tools and strategies that will directly contribute to minimizing your Mod. This is Work Comp 2.0. I will not bother you with the basics of WC as that information is available anywhere. Everything I put in this blog will be something you should know regarding how to manage your WC costs and will have a direct and measurable impact. No bologna.

It is not about safety, although we believe very strongly in the value of safety training and the multitude of efforts that can be made to reduce accidents. Scott Bills, our Director of Loss Control Services, has built the best loss prevention department of any agency I’ve ever seen. Avoiding a claim in the first place is always the best option. But this blog is about doing all those things that can drastically reduce your costs after an accident and they have to be put in place before the injury occurs.

The outline is simple:

  • Education- Owners, HR professionals, CPA’s and Supervisors need to know the information contained in this blog
  • Policy/Procedure Changes- Basic amendments to your employee manual that allow you to implement the tools that can save you money
  • Hands-On management and consultation on every WC claim

I promise you will learn more about WC and more about what truly affects your WC premiums than you ever have before. I have met with hundreds of employers and the reaction is always the same: stunned amazement that they have never been told these things…ever.

Sales Moment: I won’t do this very often, but when you learn about these simple but important WC tenets, you will ask yourself, “Why hasn’t my current agent ever told me about this?” The answer is they don’t know it. Sure they know indemnity claims are bad for your Mod and they will tell you “We can do all this for you”. But the truth is, if they could, they would already be doing it. This requires a full time COMMITMENT on the part of the agent and agency. Few agents are willing to make that commitment.

Ok, enough of the sales talk. You should also know that I believe in this. I believe it is our duty as agents to inform our clients about this, if for no other reason than NO ONE ELSE WILL DO IT. I think every employer deserves to know exactly HOW this system is rigged.

If you take the time to read this blog regularly or, better yet, allow me to speak to you directly, you will see that implementing this WC program will reduce your Mod to its’ lowest level possible, given the injuries that occur. NOT implementing it will result in the highest Mod, given the injuries that occur. I don’t know about you, but I’ll take the former outcome, please.

Finally, and this is the best part, I and my agency don’t charge a dime extra for providing this service. You will see when you read this or if we speak in person that I truly believe every employer in the state of Florida should know this and Lutgert Insurance agrees.

BTW, be sure to read the next two posts, as they give information you must have.

WC 2.2- Types of Claims- Medical Only vs. Indemnity- Must Read!!
WC 2.3- How Indemnity Impacts Your Premiums-The Math- Must Read!!

TL;DR (Too Long: Didn’t Read) Takeaways- There are simple, proven tools that will allow you to minimize your Experience Mod and consequently your WC premiums. Every employer should know this, but only the largest with full-time risk managers do. This blog will give you concrete information on how to accomplish that goal.

Please join our email list by filling out & submitting the form in the blue box on the right of this page and you will receive each blog post as it appears on our website. Feel free to call me at any time- Joe Carraher- W:239-280-3209 or on my Cell: 239-293-7772.

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The U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) has issued a final rule to improve tracking of workplace injuries and illnesses. The new rule requires certain employers to electronically submit to OSHA injury and illness data that they are already required to keep under existing regulations. The final rule also includes provisions regarding employee rights to report work-related injuries and illnesses free from retaliation.

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