…and the Human and Financial Ramifications of Managing vs NOT Managing Industry and Illness Risks and Exposures
By Robert Tuman, CCR Safety Consulting
TAKEN FROM A RECENT OSHA.GOV FATALITY AND CATASTROPHE LIST (NOTE THAT OSHA IS REPORTING DECEASEDS’ NAMES AND AGES):
“4/10/22 Salena Williams (62) suffered fatal injuries in fall onto sidewalk”
“3/28/22 Margarito Ladezma (50) electrocuted by power lines while trimming trees”
“2/27/22 Timothy Harness (54) died in trench collapse”
“2/17/22 Paramjit Deol (66) died in fall from elevated conveyor line”
“1/28/22 Carolyn Brooks (83) asphyxiated after becoming entangled in drill bit”
“1/26/22 Samuel Martin (22) died in fall from roof”
“1/10/22 William Boyer (40) died in fall from rafters”
These are but a few of the thousands of construction-related fatalities.
FROM OSHA.GOV: “10 MOST FREQUENTLY CITED OSHA VIOLATIONS (FISCAL YEAR 2021)”
Note the Estimated Cost per Employee to minimize the probability of a fall, lung disorder, ladder accident, chemical-related illness, scaffold accident, fall protection training, electrical shock or electrocution, eye and face injury, forklift training, and machine guarding.
- Fall protection, construction ($60 for safety harness. Guardrail and covers for roof and other floor openings extra)
- Respiratory protection, general industry (Half-face cartridge filter respirator: $36. Medical screening and fit testing approximately $125)
- Ladders, construction (+/- $50 per employee for ladder safety training)
- Hazard Communication, general industry (+/- $50 per employee for Hazard Communication/Globally Harmonized Systems training)
- Scaffolding, construction (+/- $750 to train employees as scaffold “Qualified Persons” who build scaffolding and scaffold “Competent Persons” who inspect scaffolding)
- Fall protection training, construction (+/- $50 per employee)
- Control of hazardous energy (Lockout/Tagout), general industry ($100 for Lockout/Tagout station equipped with locks and tags, +/- $50 per employee for Control of Hazardous Energy- Lockout/Tagout training)
- Eye and face protection, construction ($1 each for safety glasses- volume discount. $20 per employee for face shield)
- Powered industrial trucks (construction forklifts and warehouse-type forklifts), general industry (+/- $100 per participant for Powered Industrial Truck training and certification)
- Machinery and machine guarding, general industry (+/- $50 per employee for machine guarding and Lockout/Tagout training)
To get a better idea of the costs of construction-related injuries and deaths vs. the costs to contractors to reduce the probability of accidents and injuries, here are statistics from the National Safety Council’s 2020 “Work Injury Costs” (https://injuryfacts.nsc.org/work/costs/work-injury-costs/
National Work Injury Costs
Cost total— $163.9 billion
Cost per worker—$1,100
Cost per death—$1,310,000
Cost per medically-consulted injury—$44,000
Time Lost Due to Work-Related Injuries
Days Lost:
Total—99,000,000
Total due to injuries—65,000,000
Total due to injuries in prior years—34,000,000
Total in future years from 2020 injuries—50,000,000
Indirect Costs of Work-Related Injuries:
Interruption of work and loss of productivity: “Bob, can you come down. We had a bad accident.” My client, a large concrete contractor pouring 4 million square feet of concrete at a huge shopping mall under construction, had 7 guys go down when a deck collapsed. The investigation found that the ironworkers had not fully connected several “seats” holding the corrugated metal deck to the first floor load-bearing reinforced concrete columns. When the laborers started to pour, the weight of the wet concrete caused one end of the deck to collapse. Fortunately, no one was severely injured, but employees sustained cuts and bruises when they slid off the deck. EMT’s arrived within minutes, followed several hours later by OSHA Compliance Officers who camped out for 5 days investigating the accident. Local building officials joined the investigators, as did the insurer’s investigators, owner and General Contractor’s representatives, and a large area of the jobsite was closed down for at least a week, as all wanted to ensure that all “seats” were adequately secured. This created a chill, and increased the anxiety level for all workers. The owner and General Contractor were forced to extend the occupancy date at least 3 months, taking it past the busy Christmas shopping season.
Lost opportunities and grief from the loss of a valued employee: At an OSHA Roundtable of Eastern Massachusetts monthly meeting, the Safety Director for a large 100+ year-old excavation and trenching contractor got up to give her “Lessons learned”. She related being called to the scene of a fatal accident involving the Superintendent on a large Boston excavation project. A 30’ wide by 24’ high existing wall which the owner wanted to keep fell over and on to the Superintendent, crushing him. The Superintendent, a 30-year employee, had worked his way up, starting as a laborer. He was a skilled manager, respected and liked by his team, project owners, and General Contractors, and of course by his employer. What a loss. Impossible to quantify what he meant to the company.
Post-accident “safety stand downs”: Many of you have participated in “safety stand downs” after accidents and when a General Contractor wants to make a point- such as when subcontractors’ workers are observed not complying with the General Contractor’s safety guidelines- i.e. poor housekeeping, spotty compliance with required PPE, unsafe operation of equipment such as when a rough terrain forklift operator hit and damaged a main electrical panel, knocking out the power to the entire jobsite.
A client’s employees’ perspective: Safety stand-downs are good reminders, but we are already doing what we have to do to keep ourselves safe. A waste.
OSHA citations, fines and legal fees: There are multiple costs incurred when a contractor is cited by Cal OSHA or OSHA- management time spent strategizing how to best respond to OSHA, time spent at Informal Conferences and administrative hearings, time spent developing, implementing, executing and sustaining corrective actions, legal fees, and lost business due owners’ and General Contractors’ negative perceptions of subcontractors’ attention (really inattention) to safety. Just a few keystrokes (OSHA.gov and “Establishment search”) and there before your eyes is the contractor’s entire OSHA rap sheet.
For the past number of years, owners and large companies have engaged outside companies to pre-qualify contractors. This pre-qualification process requires contractors to complete extensive questionnaires, upload their safety programs and practices, their experience modification rate, their “loss runs”, their Cal OSHA or OSHA history, and prove that they are executing their safety programs and practices. Having now completed numerous questionnaires and uploaded dozens of safety programs, I can tell you with certainty that this is a time-consuming, expensive process which can tie managers up for weeks. And forget about working for that large General Contractor or owner if your “mod” is above its cutoff point, if you can’t substantiate that you are executing your safety programs and practices, and/or you have had multiple recent OSHA “serious”, “repeat” or “repeat and willful” high gravity citations.
Competitive disadvantage when bidding work: Owners and General Contractors unfortunately perceive that history might or will repeat itself, and judge contractors using historical data and their execution or lack thereof of generally-accepted and exposure-specific (i.e. roofing contractors and fall protection) safety practices. If trend lines and historical data (i.e. experience modification rates, injury loss runs), show inattention to safety, owners and General Contractors shy away. For example, a large concrete contractor was not even allowed to toss his hat in the ring on a $10 million concrete construction contract because of a 1.21 experience modification rate. The owner and General Contractor had decided to permit only subcontractors with an experience modification rate of 1.05 or lower to bid on work. No ifs, ands, buts, or letters explaining why the “mod” was 1.21. Too bad, as many of the concrete contractor’s workers’ compensation claims were questionable, had been denied, and were in litigation.
Experience modification rate increase: The dreaded “mod” or “xmod”. Like love and marriage (I’m kind of old-fashioned), your mod and workers’ compensation premium will increase following frequent and/or severe injuries. For example, prior to a freak accident involving an employee who fell off his ladder while trying to catch a tool that slipped out of his hands, a client’s experience modification was .62, down from 1.37. Due to this one claim, the client’s experience modification rate increased to .92 for each of the next three years.
Damage to reputation: “It is like having a big red A on your back”, a client told me after they were told they couldn’t bid on a big project- due to their unfavorable loss experience and high experience modification rate. Many of their claims were questionable, had been denied, and were in litigation. I suggested that the client write the General Contractor, providing details on each questionable claim. I even drafted a letter for their review. We sent it to the General Contractor, who replied “Sorry, but we’re sticking to our 1.00 mod cutoff”. The client resigned itself- “We have to bid on work with General Contractors who don’t ask too many questions”.
What can you do?
The media, especially after dramatic events, tell us the personal and financial ramifications of NOT preemptively managing risk, but seldom describe success stories. The following is one. It describes how one contractor effectively used risk management tools in its efforts to be injury-free.
5 years ago, a large electrical contractor called: “Bob, our client, a large utility, just called to tell us they will be terminating the contract unless we complete its required safety questionnaire right away. Can you help?”
In reviewing their workers’ compensation injury reports and loss run, it was apparent that numerous preventable accidents and a 1.41 experience modification rate were the source of the utility’s concerns. Further, the contractor’s inconsistent attention to safety had resulted in the temporary and permanent loss of valued employees due to injury and disability, $100,000+ in additional premium, and given the introduction of 1.00 or below “mod” cutoffs, disqualification from bidding on large projects.
The owners agreed to elevating safety and accident prevention to be on par with its corporate priorities- employee retention and satisfaction, quality, profitability, and engendering good will.
We then set about implementing practices which would get us there, and we agreed that the cornerstone of the enhanced safety program would be a daily documented discussion of injury and illness risks and exposures on every jobsite. Accordingly, we required that Foremen conduct, document and forward to senior management pre-start Job Safety/Job Hazard Analysis (“JSA/JHA”) forms, and to preemptively address actual and potential injury and illness risks and exposures.
In essence and in this case, Job Safety/Job Hazard Analysis continues to be a process where Foremen meet with their crews daily before the start of work to ask questions which help to identify and address ever-changing injury and illness risks and exposures: “What will we be doing today? How could we get injured or ill (i.e. Covid-19)? What do we need to do to protect ourselves? What equipment (i.e. scissor lifts, taller stepladders, arc flash/arc blast suits, respirators, hearing protection, etc.) and PPE do we need and what else do we need to do to protect ourselves?”. Foremen encourage crew members to participate and record crew members’ comments and suggestions, address risks and exposures, and forward completed JSA/JHA’s to the General Superintendent, the company Safety Officer.
Lo and behold, the combination of the owners’ renewed commitment to safety, employee and management execution of construction safety practices, and the daily JSA/JHA’s contributed to 5+ years without a preventable injury, Platinum status with its large clients, a .62 experience modification rate, a yearly savings of at least $150,000 in workers’ compensation premium, and more favorable rates on its other lines of insurance.
This worked so well that they went one step further, implementing extensive Pre-Task Safety Planning for every job and task which carries inherently high risk of injury and/or illness- i.e. working in Confined Spaces (manholes and electrical vaults). The estimated annual cost: +/- $10,000. Pretty good return on investment, huh? +/- $10,000 cost vs. $150,000+ premium reduction.
What more can you do?
In the midst of the late 80’s and early 90’s workers’ compensation insurance meltdown (in MA, an injured worker could collect benefits for 17 years and it took 1.5 to 2 years to get to a hearing, even if the employer and insurer had video showing the allegedly injured employee working full-time at her or his regular occupation), the Workers’ Compensation Rating and Inspection Bureau of Massachusetts (the “Bureau”) implemented the Qualified Loss Management Program (“QLMP”), with the aim of getting insurers to underwrite safety-conscious employers voluntarily and enable employers to extricate themselves from the Assigned Risk Pool. Assigned Risk Pool employers are assigned a workers’ compensation insurer- vs. being able to select one based on price and services. As an Assigned Risk, there are no discounts, credits or year-end dividends for exemplary execution of safety programs and practices, and subsequent favorable loss experience.
Under the Qualified Loss Management Program, employers in the Assigned Risk Pool (at that time 90% of workers’ compensation premium was in the Assigned Risk Pool) selected a safety consultation firm to help it implement and execute: 1. An employee-management Safety Committee which would meet at regular intervals to monitor the company’s safety program and practices and its execution, review incidents, accidents, and near-misses, and advise owners and senior managers of corrective actions. 2. An early return to work program to enable temporarily-disabled employees to return either part-time or full-time to meaningful and productive modified work. 3. Linkage to an occupational medical center which would treat injured employees in a timely fashion and which understood the importance of early return to work and modified duty. 4. A system for regular contact with injured workers.
The Workers’ Compensation Rating Bureau assigned each safety consultation firm a percentage credit which it could offer employers in the Assigned Risk Pool. I’ll explain. My firm, Compensation Claims Review Corporation, was one of the first three firms to be approved by the “Bureau” and, based on our historical success, was awarded the ability to offer Assigned Risks the maximum 15% credit on their modified workers’ compensation premium. This meant that if we certified that our client satisfactorily implemented all four legs of the QLMP, it would get a 15% credit on its modified workers’ compensation premium.
Let me translate: my largest client, a 400-employee concrete construction company with a $2.3 million workers’ compensation premium, received a $285,000 net credit (15% of $2.3 million minus my $60,000 fee= $285,000) on its modified premium. Assigned Risks received 100% of the QLMP credit in each of the first two years, 50% in the third year, and 25% in the fourth and last year. Employers could not re-enroll in the Qualified Loss Management Program after four years of credit.
Along with the implementation of a workers’ compensation reform law, the Qualified Loss Management Program was an overwhelming success. Temporarily-disabled employees returned from modified work to full duty faster and happier, employers prevented costly injuries, insurers had a reason to insure employers with good safety programs and practices and competed for their business with discounts, credits and year-end dividends, the Assigned Risk Pool shrunk to less than 25% of all Massachusetts’ employers, and workers’ compensation premiums dropped to affordable levels.
That same concrete contractor which was paying $2.3 million per year during the bad old days was now paying $275,000 per year.
In closing, it makes good human and financial sense for risk management to play a greater role in preemptively mitigating injury and illness risks and exposures up front. It is too late when the horse is out of the barn.
About the Author:
Bob Tuman is president of CCR Safety Consulting in California, providing safety consultation to construction contractors and performing Workers’ Compensation and General Liability Loss Control Surveys for property and casualty insurers. For further information or to contact CCR directly, please contact: 805-545-5976 or email bobtuman@gmail.com
