Workers’ Compensation Frequently Asked Questions

01. Q. What is the difference between a credit and debit on an experience modification factor and how is that determined?

A. For an explanation of Debit and Credit mods.

02. Q. What is meant by the term “Expected Losses” and how is that used to calculate my premium?

A. For information on “Expected losses”.

03. Q. What should I do to prepare for an audit?

A. For information on Workers’ Compensation Audits.

04. Q. What are the essential requirements for a workplace safety Program?

A. For the essential requirements of a Workplace Safety Program.

05. Q. What must we do to qualify for a Drug-Free Workplace?

A. For the requirements to be qualified as a Drug Free Workplace.

06. Q. What is meant by the term Employers Liability?

A. Section B of the standard Workers’ Compensation insurance policy.

This is the part of the policy that has a dollar limit shown for the coverage.

This section insures employers for liability from employees that is not covered by the statutory Workers’ Compensation provisions of the state (which are insured in Section A and have no set dollar limit on the policy).

For a complete explanation of Coverage A and coverage B.

07. Q. Where can I get a Workers’ Comp claim handling checklist?

A. For a workers’ comp claim handling checklist.

08. Q. Where can I get a list of the top 48 indicators of Workers Comp Fraud?

A. For a list of the top 48 indicators of Workers’ Comp Fraud.

09. Q. What is meant by the term Paid Loss Retro?

A. The term refers to claims/Losses that have actually been paid by the Comp carrier.

The dealer is not billed for claims until they have actually been paid. Other plans take claim reserves into consideration in determining dividends etc.

10 . Q. How is a physician is chosen for workers comp claims?

A. The employer selects the physician.

11. Q. How does a workers’ compensation Paid Loss Retro work?

A. The policy is offered in the form of a minimum premium to be paid in (like 50% of standard premium), plus paid losses which are billed to the dealer, and a maximum premium amount for which the dealer is liable. (like 110% of standard premium)

The dealer pays in a minimum premium plus paid claims throughout the policy period. For example, using $200,000 as a standard premium, a dealer would pay in 50% or $100,000 in equal monthly installments. If there were no claims, that is all that would be paid in resulting in a savings of $100,000 plus the time value of the money. However, for this example we will use paid losses of $30,000 for the year. A loss conversion factor (LCF) and a tax multiplier of 1.18 which equals $34,500. This means a cost to the dealer of $134,500 for the year and a savings of $65,500 for the year.

For a worst case example, assume a maximum premium liability to the dealer of 110% or $220,000. In this case, we will also assume a bad claims year resulting in paid losses of $250,000. The dealer would pay in $220,000, the maximum premium the dealer was liable for. In this example the dealer would be paying a “penalty” of $20,000 above the “standard” premium of $200,000. The insurance carrier would have to pay the excess spread between the dealers maximum exposure of $220,000 and the $250,000 in losses or $30,000 plus loss adjustment costs.

12. Q. How do the other plans work?

A. Guaranteed Cost:
A Workers’ Compensation insurance policy that is not subject to adjustment due to losses that occur during the policy term. In a Guaranteed Cost policy, the only variable affecting premium that should change between policy inception and audit is payroll. This is in contrast to the various kinds of Loss Sensitive plans, such as Retrospective Rating, Retention Plans, or Sliding Scale Dividend Plans, where there is a premium adjustment made based on losses incurred during the policy term.

Incurred Losses:
Paid losses plus loss reserves for estimated future claims costs. Many loss sensitive insurance policies adjust premium based on incurred losses rather than just on paid losses.

Retention Plan:
Similar to Retrospective rating, this is a Workers’ Compensation policy format that adjusts the premium, up or down, based on losses (and associated costs) that occur during the policy period.

Sliding Scale Dividend:
A return of premium, after policy expiration, based on the actual loss experience of the insured business. The size of the dividend varies with the actual loss ratio of the insured business.

Section Three

Workers comp insurance laws for Florida

01. Workers comp payments

02. Percentage of wage a worker will receive while on disability (temporary or permanent): 66 2/3 percent

03. Temporary disability
Maximum period a worker can receive payments while on temporary disability: 104 weeks

04. State mandated minimum payment per week:
If 66 2/3 percent of worker’s weekly wage is less than $20, the worker receives $20. If the worker’s average weekly wage is less than $20, the worker receives their actual wage.

05. State mandated maximum payment per week:
If 66 2/3 percent of the worker’s weekly wage is greater than 100 percent of SAWW, the worker receives 100 percent of SAWW.

06. SAWW=State’s Average Weekly Wage

07. Permanent disability
State mandated minimum payment per week: If 66 2/3 percent of the worker’s weekly wage is less than $20, the worker receives $20. If the worker’s actual weekly wage is less than $20, the worker receives their actual wage.

08. State mandated maximum payment per week:
If 66 2/3 percent of the worker’s weekly wage is greater than 100 percent of SAWW, the worker receives 100 percent of SAWW.

Pursuant to section 440.12 (2) (a), Florida Statutes, the maximum weekly compensation rate for work-related injuries and illnesses shall be equal to 100 percent of the statewide average weekly wage, rounded to the nearest dollar. Accordingly, the maximum weekly compensation rate for work-related injuries and illnesses occurring on or after January 1, 2003 shall be $608

09. Other state workers comp insurance guidelines
Workers comp benefits are subject to offsets by Social Security benefits and unemployment insurance benefits.

10. After maximum medical improvement is reached, a $10 patient copayment is required for all medical services.

11. Employers (Other than construction) with fewer than four employees are exempt from workers compensation requirements.

Source: United States Department of Labor, Employment Standards Administration, Office of Workers Compensation Programs, Division of Federal Employees Compensation.

All wage data is based on states’ 1999 figures.

Average wages may have changed in some states.

Disclaimer: This information should not be interpreted as legal or financial advice, or as a recommendation to buy or forego any workers compensation insurance product.

Section Two

Division of Workers’ Compensation

Employers FAQ

13. Q: What is the employer’s responsibility in participating in the Early Intervention Program (EIP)?

A: Employers may participate in the Early Intervention Program as an independent partner or through their workers’ compensation carrier or third party administrator. Employers should contact their carrier or TPA to determine if their First Reports of Injury of Illness (FROII) are already being filed with EIP. As an independent partner, employers are requested to fax the FROII to the Employee Assistance Office (EAO) immediately after notification of the accident by the injured worker. Only lost-time accidents (more than 7 days from work) should be reported, or serious accidents in which lost-time or permanent impairment is anticipated.

14. Q: How is the EIP different from Case Management?

A: Case management usually involves the coordination of all activities involved in the injured worker’s recuperative process from the inception of the injury until case closure. Case managers are responsible for ensuring that medically necessary and appropriate treatment is rendered and all other applicable benefits are provided. Pursuant to section 440.191, Florida Statutes, Florida Workers’ Compensation’s role is to facilitate the self-executing nature of the workers’ compensation system. Through EIP, Florida Workers’ Compensation provides education and information, which empowers injured workers to make informed decisions concerning their rights and benefits. In addition, Florida Workers’ Compensation serves as a resource for the injured worker to answer questions and provide dispute prevention and resolution assistance. Following the initial EIP contact, additional services would be rendered upon request by the injured worker.

15. Q: Do you have Case Managers in the program? If not, how do you facilitate the injured workers getting medical care?

A: The EIP program is staffed by workers’ compensation specialists. These specialists work cooperatively with the medical experts from the Agency for Health Care Administration, carriers, third party administrators and medical care coordinators regarding medical care issues. EIP specialists assist in the facilitation of medical care only when there is a pending dispute between the injured worker, carrier and/or managed care arrangement. EIP specialists utilize their expertise to effect an amicable resolution of the dispute, thereby avoiding costly litigation.

16. Q: Should the “notice” of injury come from the employer or the carrier?

A: The official First Report of Injury or Illness is sent to Florida Workers’ Compensation by the carrier. For purposes of the Early Intervention Program, the notice can come from either the employer or the carrier.

17. Q: As a business owner, I fail to see how I can be sued by an injured worker if I provide all the necessary care, light duty work, and offer to retrain the employee.

A: Under the provisions of Chapter 440, Florida Statutes, an injured worker has two years from the date of the accident to file a petition for benefits with the Division of Administrative Hearings. If an employer is providing benefits and return to work options, that should be sufficient to meet the ultimate goal of returning an injured worker to gainful employment. However, an employer/carrier’s definition of “necessary care” and that of an injured worker may differ. When that happens, the injured worker has no remedy except to file a petition for benefits and have a judge of compensation claims determine whether the benefits that are being provided are sufficient, or if additional benefits not being provided are required by Florida law. If the employer is providing benefits, all expenditures must be reported to the employer’s workers’ compensation insurance carrier for statistical purposes.

18. Q: What in the system would prevent an injured worker, who wanted to leave his employer anyway, from claiming to be hurt, waiting out the treatment, still claiming to be hurt and then trying to settle? It would not cost him anything but a few hours to do this and he would have nothing to lose.

A: There is nothing in the current system to prevent the scenario just described. It is true that these types of claims do occur and that they are settled by insurance carriers for a nominal amount of money to rid the employer/carrier of a nuisance case. It is a common practice of insurance carriers handling workers’ compensation claims to employ surveillance techniques when it suspects fraud on the part of the injured worker; however, these techniques do not always result in a positive result for the employer. Because some injuries are very hard to definitively diagnose (soft tissue injuries, for example), it is possible for unscrupulous employees to continue to complain of pain and disability associated with an injury and difficult for even the most competent physician to state, within a reasonable degree of medical certainty, that the pain/injury does not exist. Statutory solutions for this type of problem are difficult to promulgate, largely because intent or state of mind is very difficult to regulate effectively.

19. Q: Who needs Workers’ Compensation coverage?

A: If you are in an industry, other than construction, and have four (4) or more employees, full-time or part-time, you are required to carry workers’ compensation coverage (an exempted corporate officer does not count as an employee). If you are in the construction industry, and have one (1) or more employees (including yourself), you are required to carry workers’ compensation coverage (an exempted sole proprietor, partner, or corporate officer does not count as an employee). If you are a state or local government, you are required to carry workers’ compensation coverage. If you are a farmer, and have more than five (5) regular employees and/or twelve (12) or more other workers for seasonal agricultural labor lasting thirty (30) days or more, you are required to carry workers’ compensation coverage. If you have additional questions, contact the Employer Help Line at (850)921-6966 or the Bureau of Compliance at (850)488-2713. Reference: Section 440.02(15), Florida Statutes.

20. Q: If if I suspect fraudulent activity in a workers’ compensation claim, where do I report this?

A: Suspected workers’ compensation fraud can be reported directly to the Department of Insurance, Bureau of Workers’ Compensation Fraud, 111 Gadsden Street, Suite 100A, Tallahassee, Florida 32301, or to the bureau’s toll free hotline number at 1-800-378-0445. Suspected fraud can also be reported to the Florida Workers’ Compensation, Bureau of Compliance’s toll free hotline at 1-800-742-2214. Anonymous calls are accepted. You can also fill out the Non-Compliance Referral Form to report employer’s who do not have workers’ compensation insurance coverage.

Reference: Section 440.1051, Florida Statutes

21. Q: Can an employer be liable for double compensation?

A: An employer can be liable for double compensation if a minor child is injured while employed in violation of any of the conditions of the child labor laws of Florida. The employer alone, not the insurance carrier, is liable for up to double the normal compensation as provided by the Workers’ Compensation Law. To receive further information regarding the Child Labor Law, call the Child Labor Office at (800)226-2536.

Reference: Section 440.54, Florida Statutes

22. Q: Who can I contact with questions or concerns regarding risk classification codes and premium amounts?

A: Call your insurance carrier or agent. If you have a dispute regarding the occupational classification codes, you can call the National Council on Compensation Insurance (NCCI) at 1-800-622-4123.

23. Q: Does the injured worker pay any part of my workers’ compensation insurance premium?

A: The law is very specific on this point. It is the employer’s responsibility to pay the entire premium for workers’ compensation insurance coverage.

24. Q: What kinds of employee injuries are covered?

A: The law covers all accidental injuries and occupational diseases arising out of and in the course and scope of employment. This includes diseases or infections resulting from such injuries. The law also covers death resulting from such injuries within specified periods of time. Even if you do not think an injury is covered, you must still file the First Report of Injury or Illness (DWC-1) with your insurance carrier for determination of responsibility.

25. May an employer ask applicants about their workers’ compensation history?

A. No. An employer may not ask applicants about job-related injuries or workers’ compensation history. These questions relate directly to the severity of an applicant’s impairments. Therefore, these questions are likely to elicit information about disability.

26. Q: What injuries are not covered?

A: The law does not provide compensation for the following conditions:

  • a mental or nervous injury due to stress, fright, or excitement;
  • a work related condition that causes an employee to have fear or dislike for another individual because of the individual’s race, color, religion, sex, national origin, age, or handicap; “pain and suffering” has never been compensable in Florida, nor is it compensable in any other state.

The renunciation of common law rights and defenses by employers and employees alike is the foundation of workers’ compensation law as indicated in s.440.015 Florida Statutes. The employer may not sue an injured worker for causing a catastrophe nor can the injured worker sue the employer for their injury. This trade-off makes it possible for injured workers to receive immediate medical care, at no cost to the injured worker, without any consideration for who was at fault, the employer or the employee. In civil law, negligence must be established through litigation before any compensation is awarded. Compensation will not be paid in several other instances:

  • if the injury is caused by the employee’s willful intention to injure or kill himself or another;
  • if the injury is caused primarily because the employee is intoxicated or under the influence of drugs;
  • if the injury or death of the employee is covered by the Federal Employer’s Liability Act, the Longshore and Harbor Workers’ Compensation Act, or the Jones Act (if the injured worker is a “seaman” or member of a crew).

Reference: Section 440.02 & 440.09, Florida Statutes

27. Q: Is compensation payable if an employee refuses to use a safety appliance or observe a safety rule?

A: Compensation will still be paid, but indemnity benefits (partial wage replacement) may be reduced by 25 percent if the employee knew about the safety rule prior to the accident and failed to observe the rule, or if the employee knowingly chooses not to use a safety appliance which the employer has directed him to use.

28. Q: Will becoming a drug-free workplace save me money on my insurance premiums?

A: If you implement a drug-free workplace program in accordance with the criteria set forth in s.440.102, Florida Statutes, you will be eligible for a 5 percent premium credit to your workers’ compensation insurance premium. In addition to the premium credit which you will be eligible for, having a Workers’ Compensation Drug-Free Workplace Program will make your workplace safer, resulting in fewer accidents, which may reduce your workers’ compensation costs.

29. Q: Am I required to become a carrier certified drug-free workplace?

A: Becoming a carrier certified drug-free workplace is voluntary. However, without the certification, you may not be eligible for any of the benefits provided under this program.

30. Q: Under the Workers’ Compensation Drug-Free Workplace Program, can I conduct random drug testing of my employees?

A: In addition to the situations in which testing is mandatory, the law does not prohibit a private employer from conducting random testing or any other lawful testing of employees. A public employer may institute random testing of employees in “safety sensitive” or “special risk” occupations.

31. Q: Can I use a breathalyzer as a valid drug testing method?

A: Under the Workers’ Compensation Drug-Free Workplace Program, the use of a breathalyzer cannot be used as a testing method for initial or confirmation tests.

32. Q: What if an employee refuses to take a drug test?

A: If an injured worker refuses to submit to a test for drugs or alcohol, the employee may forfeit eligibility for medical and indemnity benefits if this sanction is contained within the employer’s written policy. If an employee or job applicant refuses to submit to a drug test, the employer is permitted to discharge or discipline the employee or may refuse to hire the applicant (if specified in the written Drug-Free Workplace Policy), since, by law, refusal to submit to a drug test is presumed to be a positive test result.

33. Q: If a terminated employee files for unemployment compensation benefits, may I inform the adjudicator that the employee was terminated as a result of a positive drug test?

A: The adjudicator is bound to maintain this information confidential under s.443.1715(3)(b), Florida Statutes, until introduced into the public record pursuant to a hearing conducted under s443.151(4), Florida Statutes. Under all other instances employers may not release any information concerning drug test results obtained pursuant to section 440.102(8)(b), Florida Statutes, unless such release is compelled by an administrative law judge, a hearing officer, or a court of competent jurisdiction or is deemed appropriate by a professional or occupational licensing board in a related disciplinary proceeding.

34. Q: Can I post the results of my employees’ drug tests?

A: All information, interviews, reports, statements, memoranda and drug test results, written or otherwise, received by the employer through a drug testing program is confidential and cannot be posted in any public manner.

35. Q: Am I responsible for payment for services when my employee participates in an Employee Assistance Program (EAP)?

A: No, but if you choose to pay for an Employee Assistance Program, you have the right to choose the facility providing treatment. If an employee does participate in an Employee Assistance Program, you, the employer, are required to extend the same considerations as reflected under the federal guidelines established for the Americans with Disabilities Act and the Family and Medical Leave Act.

36. Q: How many days does the employee have to re-test the specimen if he or she wishes to contest a positive test result?

A: During the 180 day period after written notification of a positive test result, the employee who has provided the specimen shall be permitted by the employer to have a portion of the specimen re-tested, at the employee’s expense, at a licensed or certified laboratory of his or her choice.

37. Q: Who pays for the drug test?

A: The employer is responsible for payment of all drug tests they may require. However, if an employee wishes to have the specimen re-tested, it will be at the employee’s expense.

38. Q. May an employer ask applicants about their workers’ compensation history?

A. No. An employer may not ask applicants about job-related injuries or workers’ compensation history. These questions relate directly to the severity of an applicant’s impairments. Therefore, these questions are likely to elicit information about disability.

39. Q. What about sub-Contractors that tell me they are exempt and not required to carry Workers’ Compensation insurance?

A. For more information on this subject.