Declining work injury trends and rising non-occ absence trends are signaling to workers’ comp claims payers the need to diversify.

Employers are being saddled with an ever-broadening array of non-occupational job disability rights and employee leave mandates. Risk of government fines and private party suits alleging employer non-compliance with these mandates is a real and present danger.

Workers’ comp claims and other vendors are well-positioned to help. Broadspire, Sedgwick and York have introduced what can be called "absence management services." The absence business is a logical repositioning strategy.

Absence management covers traditional benefits, such as sick and vacation leave and short- and long-term disability. It also addresses the 1993-enacted Family and Medical Leave Act benefits. In the past two decades, federal, state and even local governments have created many mandated leave benefits that are so extensive and complicated to manage that an employer is likely to violate the mandates unless it is constantly on top of legal developments. 

Parental, military, family, educational and many other types of leaves have been put on the books. Each comes with specific notification requirements.   

Even before this expansion of leave mandates, the Americans with Disabilities Act, enacted in 1990, pressed upon employers the obligation to accommodate workers with disabilities. The Act was amended in 2008 in ways that expanded the number of legally protected individuals and put more procedural demands on employers.

The scale of the challenge can be astounding. “At any point in time, the average large employer has 20% of employees absent from work due to an active Family and Medical Leave (FML) claim, workers’ compensation, or other type of absence request. The impact of unscheduled employee absences on American business has been estimated as much as $74 billion, or 36% of payroll,” says Sedgwick.

Sedgwick has been providing non-occupational claims and benefit management services for over two decades. Shawn Johnson, the firm’s senior vice president for disability services, says that some of the firm’s employers began to ask the firm to manage short-term disability claims in the early 1990s.

The third-party administrator has evolved its service suite to include, in its own words, “disability, FMLA, and other employee absence” services. Its latest corporate acquisition to boost its capabilities is Absentys, an information technology firm it purchased in December 2014.

Broadspire launched its Integrated Disability and Absence Management Services (IDAM) in 2014, to service ADA, FMLA, state leaves and STD. Kelly Dieppa, director of disability and leave management operations, says that “the days of managing disabling conditions differently based on etiology (occ vs. non-occ) have passed us by.” When it announced its expanded service line in August 2014, the firm alluded to “an aging workforce [that] is expected to increase absences, leaves and short- and long-term disabilities. The federal Affordable Care Act is expected to increase regulatory and administrative activities, as well as costs.”

Broadspire forged a partnership with ClaimVantage, which delivers an absence management service on a cloud-based Salesforce platform.

York Risk Services Group acquired in early 2014 CareWorks, an Ohio-based TPA and managed care firm. CareWorks brings to York an FMLA/absence management capability.  The fact that York does not publicize this service on its website suggests that in contrast to Sedgwick and York, it may be holding off aggressive promotion of absence management while integrating the service into York’s product line.

This pattern of workers’ comp claims firms building absence management capacity by acquisition is likely to continue. Firms can find individual talent through professional associations, such as the Disability Management Employer Coalition and the Integrated Benefits Institute.

A medium- to large-size employer client of a workers’ compensation claims payer should be very concerned about absence management’s legal exposure. These employers account for roughly half of all workers’ comp claims in the country. Over time, the sales and marketing arms of workers’ compensation firms are going to ramp up their awareness of this business opportunity and search for resources to deliver services. It’s a matter of when, not if.