In April 2002, a laborer who had been with Dover Home Remodelers, North Olmsted, Ohio, for five months injured his rotator cuff. He went through rehabilitation and eventually had surgery, after which his physician said he showed “medical maximum improvement.”

Although the doctor said the employee could work in some capacity, the employee filed a psychiatric claim stating that he could not sleep or work, nor have relations with his spouse due to his injury. He also had suicidal tendencies, and DHR was given a 40% reduction on this portion of his claim. He has not returned to work. His claim against Dover's account now exceeds $84,000. (Ohio's Bureau of Workers' Compensation, which is the insurer, maxes out charges at $75,000.)

DHR is now a “penalty-rated” company. “We are not in [an insurance] group anymore,” says treasurer and co-owner Eileen Orr, who admits to having hired the laborer without doing a background check. Before this claim, DHR's premiums — through a premium discount program, which provided a discount of 55% — were around $5,000 every six months. Now premiums are nearly $50,000 every six months. “How do you budget that?” Eileen asks.

STATE BY STATE Ohio is one of six “monopolistic states” where businesses are required by law to get workers' compensation insurance through the state, not through a private insurer. Other states have different requirements. Regardless, in any state, whenever there's a claim, rates will rise. In states where there is insurance competition, the rate of increase is usually lower than in monopolistic states.

Eileen and her co-owner husband, Jim Orr, have lowered premiums by joining a BWC-sponsored “Drug Free Workplace Program.” Because their company is small, it is not required to test randomly — just new hires, employees who are post-accident, and where there is reasonable suspicion. Eileen holds monthly safety meetings and belongs to a safety council.

DHR has a “transitional workplace” policy, which puts employees back to work as soon as possible. If there's a job an employee is physically able to do, according to his or her doctor, they're asked back. “If there's nothing here,” Eileen says, “you can ring the bell at the Salvation Army and the company will pay the [employee's] full hourly rate for 60 days.” (See “If You Have a Claim,” at right.)

Since this large claim, the Orrs have become more proactive about screening potential employees.

As part of DHR's job application, candidates are asked their permission to do a background check; they receive a safety packet when they get hired and they have 90 days to submit to a drug test. They are also asked to sign a form stating that if injured on the job, they are willing to come back to work with authorization from their physician. “If they lie or falsify anything, that's grounds for termination,” Eileen says.

Through all this, Eileen has kept a positive attitude and learned all she can about workers' compensation. By July 2008, DHR no longer will be penalty rated and will be allowed to join a group. “You don't realize how one person can have such an effect on so many others. It's caused a huge ripple effect,” Eileen says. “We didn't give a raise last year.”