Risks and Benefits for Employers of Integrated Absence Management

Integrated Absence Management is a relatively new term for a program that has been in existence for nearly a century. Central management of a variety of private contracts and public laws dealing with employee absence began in New York with state and local governments, as well as a few large corporations, shortly after World War I with the growth of the workers' compensation law.

The decades that followed saw the appearance and growth of unemployment, Social Security disability, short-term disability and Family Medical Leave Act benefits. By the early 1980's, it was appreciated that vendors would soon have a viable service to offer by providing software and claims management services since it was obvious that the computer would be the driving force behind handling a vast amount of information, and claims accompanied by overlapping, and seemingly contradictory, requirements for filing, privacy, appeals, preemption and a host of other issues.

A search of the internet reveals dozens of businesses, some large and national, others small and local, now offering assistance for "integrated absence management", with a growing variety of choices. How does an employer select a manager for its social insurance programs, if indeed it needs one? Employers should first be aware of the following:

1. A computer and an outside management team will only be as effective as your own ability to provide a sufficient amount of accurate information in a timely fashion. The advertising literature will play no role whatsoever in processing a claim, nor will you be relieved of any responsibility.
2.  Computers are fast at calculations and retrieval of documents entered into their data base. However, most of the decisions that must be made on claims are judgment calls which depend on intimate knowledge of the employee, the job tasks, the work force, the products and the company standing in the community. If you rely on a program to make these decisions you have lost control of employee morale at a time when it is most vital to stand by a member of your company.
3. Your employees will look to you first, even if they have been told that an outside vendor will be making all the decisions. Any failures will be yours, regardless of who has the contractual liability.
4. Your business is a social community to your employees. They will not naturally trust outside management of their claims and will expect you to stand by them. Even if an employee is absent for a year or more you can be sure that ten or more active employees will remain in contact and will hear, and repeat, tales of mismanagement, late payment, and unjust denial of claims made by their co-worker.
5. Privacy laws vary from state to state. The New York workers' compensation law prohibits disclosure of claim information without the written consent of your employees on a signed OC-110A form. Even then the information may not be used to determine fitness for work as the Workers' Compensation Board has the exclusive right to do so. Improper disclosure or use of the information is a crime, even though a release may have been signed, yet many independent benefit managers use software which unlawfully distributes workers' compensation information. Employee outrage at such disclosures is predictable and understandable. Ask a prospective manager to explain in detail their understanding of Section 110-a of the Workers' Compensation Law.
6. Before selecting an independent manager call their company at the general number listed on their web site, not the inside number given to prospective clients. Ask to speak to the claims unit. If you cannot get through or are treated in an abrupt or disinterested manner consider this: your employees and anyone trying to assist them will be treated in the same fashion.
7. It has been estimated that the indirect cost to an employer of a lost-time claim are several times the wage replacement and medical benefit costs. A claim improperly denied by an outside vendor will appear in your claims data as a cost saving. However, the damage to employee morale will spread far beyond the employee affected, and the costs will be far higher than the temporary savings.
8. Check the internet to see if there exists a website in which people post complaints about a prospective vendor's claims handling. Remember, trial lawyers look to such websites as a source of lucrative work. Do not volunteer your employees as grist for that mill. The above should not discourage an employer from obtaining a qualified manager. The field has much competition and the best players will quickly learn ;from the mistakes being made by the others. Take your time and ask the tough questions. Trust (sort of) but verify (always). Therefore, prior to purchasing software and services consider the following:
   1.  Will this software and service save the company time. (Yes, but perhaps not as much as you imagine).
   2. Does the vendor truly have more skill and knowledge about employee benefits laws than the people in your company? (Yes, about many details, especially about forms not commonly used by employers.).
   3. Does the vendor know as much about your employees as you do? (Absolutely not! This is the greatest weakness of an outside service or computer program).
   4. Does the vendor understand how state and local laws apply to your type of business in your part of the state? (Talk to a lawyer who has represented your company in the past on workers' compensation, disability, unemployment or discrimination claims. Ask them to attend a meeting with a prospective vendor and ask the lawyer to prepare three simple questions which will reveal the level of understanding that this vendor has about your business and its problems.)
   5. Does the vendor have any clients inyour state about the same size asyour business? (If so, call the risk manager of that company and ask for an off-the-record conversation about the vendor's reputation. With discrete inquiry you might be able to locate a former client and find out if, and why, they were dissatisfied.)
   6. Most vendors will assure you that they have strict security measures in place. Ask them, precisely, whatthey willdo for one of your employees in the event that security is breached. (If there is no plan in place to deal with that event be suspicious. Security can be breached in many ways. Ask any private investigation company.)

The issues raised above will be faced in one way or another by virtually every business. The time to consider your own response to these problems is best considered now, on a theoretical basis, rather than later, when real problems will arise. Your employees will truly appreciate your efforts.