The ALARIS Group, Inc. ® Current Economic Impact on Minnesota Statutory Vocational Rehabilitation April 14, 2009 Rob

1. The ALARIS Group, Inc.®Current Economic Impact on Minnesota Statutory Vocational RehabilitationApril 14, 2009Robert Otos & Mike Kahnke

2. How is Minnesota Impacted by the Current Economic Recession • Minnesota’s current unemployment rate is 8.1% up from 5.0% just one year ago

3. Business sectors hardest hit: • Construction down 19.5% • Professional and Business services down 8.5% • Manufacturing down 7.7% • Business gaining: • Education and Health Services up 3.6% • Government jobs up 200 jobs (mainly to local government)

4. Vocational Rehabilitation Benefits for Injured Workers • The Current Economic Status has not changed the rules which govern rehab benefits for injured workers • Referral to QRC at 13 weeks of temporary total disability, or if temporary disability is expected to exceed 13 weeks. (Tracked through Disability Status Report). • The Injured worker must be found to be a “Qualified Employee” • “Qualified employee" means an employee who, because of the effects of a work-related injury or disease, whether or not combined with the effects of a prior injury or disability: • is permanently precluded or is likely to be permanently precluded from engaging in the employee's usual and customary occupation or from engaging in the job the employee held at the time of injury; • cannot reasonably be expected to return to suitable gainful employment with the date-of-injury employer; and • can reasonably be expected to return to suitable gainful employment through the provision of rehabilitation services, considering the treating physician's opinion of the employee's work ability. • But He was LAID OFF!!! • Erickson v. City of St. Paul

5. So, what has changed in this environment? • The Return to Work Spectrum: • Job Placement • What constitutes a good job search • Documentation • Resume Mistakes • Looking for work in today’s world • What should a claims adjuster expect? • Want Fries with that? • Consideration must be given to former employment, current labor market, work history, qualifications, age, education and interest. • Skills Enhancement • Vocational Testing • RETRAINING!! What are the rules?

6. Retraining • MN Rule 5220.0750, Subp. 1: The purpose of retraining is to return the employee to suitable employment through a formal course of study. Retraining is to be given equal consideration with other rehabilitation services, and proposed for approval if other considered services are not likely to lead to suitable gainful employment. • Insurer must notify employees of their right to request retraining prior to 80 weeks of combined temporary disability. • Employee requests for retraining consideration must be made: • prior to 104 weeks of combined temporary disability (TTD + TPD) for injuries occurring between October 1, 1995 and October 1, 2000. • prior to 156 weeks of combined temporary disability (TTD + TPD) for injuries occurring on or after October 1, 2000. • Prior to 208 weeks of combined temporary disability (TTD + TPD) for injuries occurring on or after October 1, 2008. • Hallum vs. Potlatch. • Retraining is limited to 156 weeks (based on school calendar). • Poole factors. • Independent Vocational Evaulations

7. What Can the Employer or Insurer do? • Implement a RTW/Modified Duty Program: • Keeps employee from being focused on claim • Studies routinely show the longer a person is out of work, the less likely the person is of ever returning to employment • Employer still receives some benefit from employee working even in a light-duty position • Keeping people at work is always cheaper than the alternative! • Direct vs. Indirect cost of absenteeism • Temporary disability benefits will be greatly reduced, if not eliminated altogether • Employer is not required to pay same wage for light duty as full duty • Caution: • Temporary disability benefits are paid out at a lower rate, usually 2/3 of the claimant’s average weekly wage, but they are nontaxable. Some employers have voluntarily paid the additional 1/3, meaning that employees earn MORE by staying at home than at work, thus creating a financial disincentive to return to work • By limiting temporary disability benefits, perception of permanent disability claim may be diminished • May eliminate need for vocational rehabilitation benefits

8. Best outcomes come from early intervention. • Coordinate appropriate medical services and referral from the onset of the injury. • Promote early RTW. • Build a rapport early on with the employee. • Does not always have to be SVR services, look at case management involvement, even if task based. • Communication is Key to success • Talk to the QRC/Placement Vendor • Don’t ignore “those” forms! • Remember, you have a say in the plan as well.

9. Costs of Rehabilitation • Statutory Rehabilitation effective 10/1/08: • QRC Professional time = $91/hour • QRC Travel = $68.25/hour • QRC Wait time = $45.50/hour • QRC-Intern Professional time = $81/hour ($10.00 < QRC rate) • Reduction of professional time rate by $10.00/hour when either; • Duration of rehabilitation exceeds 39 weeks. • Cost of rehabilitation exceed $3500.

10. QRCs limited to 2 hours of billable time in any 30 day calendar period when placement activities. • Additional may be requested by QRC and can be authorized by adjuster. Good issue to discuss upon initiation of placement. • Insurer has the right to select placement vendor. • Placement Services effective 10/1/08: • Placement time = $69.08 • Travel = $51.81 • Wait time = $34.54 • Rates are adjusted on 10/1 each year pursuant to MS 176.645.

11. Thank youwww.alarisgroup.com