Page 1Copyright © 2010 Raytheon Company. All rights reserved.

Self-Insured Workers’ Compensation Program

Frank Ruel

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Agenda

Raytheon Company Overview Integrated Disability Program Workers’ Compensation Program Self Administration Benefits Return to Work Conclusion

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›› A global leader in technology and innovation

WHO WE ARE

A technology and innovation leader specializing in defense, homeland security and other government markets throughout the world  

2009 net sales: $25 billion 75,000 employees worldwide Headquarters: Waltham, Massachusetts

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›› Ensuring the success of our customers

To be the most admired defense and aerospace systems supplier through world-class people and technology.

OUR VISION

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Raytheon Business HeadquartersRaytheon Business Headquarters

Global HeadquartersWaltham, MA

›› 75,000 employees; 2009 net sales: $25 billion

Integrated Defense Systems

Tewksbury, MA

Technical ServicesReston ,VA

Intelligence and Information SystemsGarland, TX

Network Centric SystemsMcKinney, TX

Missile SystemsTucson, AZ

Space and Airborne SystemsEl Segundo, CA

BD and RaytheonInternational Operations

Rosslyn, VA

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Organization Chart

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Integrated Disability Program at Raytheon

Workers’ Compensation• Self-Insured and self-administered in MA and RI• Claims administered by Liberty Mutual nationwide (except

MA/RI) as well as for U.S. employees working overseas

Short/Long-Term Disability• Self-Insured throughout the U.S. for STD and LTD• Employees can purchase optional coverage for higher benefit

rates and long-term disability• Claims are handled by MetLife.

Unemployment Compensation (Claims)• Claims administered by TALX

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Raytheon Disability Program Absence Management Goals

Return to work initiatives• Early and medically safe• Whether Occ. or Non-Occ.• Plan RTW- Lead discussions

Corp resource to consult and train re: Absence Management / productivity • HR, management, and front-line leaders • Safety and medical staff

Develop innovative RTW programs Engage medical community and

Raytheon Physicians

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Raytheon Workers’ Compensation Program (MA & RI)

Self-Insured• Raytheon funded for workers’ compensation coverage• Excess coverage through Liberty Mutual over retention level

Self-Administered • “In-house” Claims processing – investigation,

forms, claims decisions• Bill Payment• Utilization Review (UR) • Loss Prevention• Litigation Management – Outside Counsel

Other Resources• On-site Clinics staffed with nurses and M.D.’s• Medical Consultants• Vocational Rehabilitation Specialists

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Advantages vs. Disadvantages of Self-AdministrationPros

Integration with the Business• Access to Raytheon facilities

and Supervisors (in-person)• Working relationships with

management & safety• Employer databases

Claim Analyst handles Conciliations

Manage medical-only claims Integration of RMIS, Risktrac,

MetLife Database, Medgate Relationships with Doctors TPA comparison

• Superior level of service• Lower cost

Cons Bonding requirements Personnel issues Overhead costs

• Head count• IT costs• Office Space

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Raytheon Workers’ Compensation Program History

Self-Insured as of 1/1/1992 Self-Administered as of 1993 Currently cover about 15,000 employees (MA & RI)

• Union workforce ~ 2,300 • Early 1990’s Union workforce ~10,000

Decreased claim volume due to:• Reduction of touch-labor

workforce in MA• Proactive EHS initiatives • WC reform

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Paid Lost Work Days – Insured vs. Self Insured

42

26

0

5

10

15

20

25

30

35

40

45

2009 Avg Duration

Insured

SelfInsured

Based on a 5-day work week

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Average Lost Time Claim Cost – Insured vs. Self Insured

$31,287.29

$18,459.03

$0.00

$5,000.00

$10,000.00

$15,000.00

$20,000.00

$25,000.00

$30,000.00

$35,000.00

3 YR AVG $ LT Claims

Insured

SelfInsured

1/01/07-12/31/2009 Val 4/1/2010. Loss limit of 250k

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Average Expense Cost – Insured vs. Self Insured

$781.69

$205.14

$0.00

$100.00

$200.00

$300.00

$400.00

$500.00

$600.00

$700.00

$800.00

3 YR AVG $ Expense

Insured

SelfInsured

1/01/07-12/31/2009 Val 4/1/2010

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Jurisdictional Difficulties

No control of medical (choice of physician)

High SAWW, high compensation rates

MA Fee schedule - negotiated medical rates

Fairly liberal ALJ’s Difficult to get relief from

SIF

Legal issues• Fee incentive for employee

attorneys to file• RTW can be lengthy legal

process No cap on TTD Specific benefits

• Whole body disfigurement• Very subjective system

Forms, forms, forms!

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Coordination of Benefits

Share data with Raytheon's Health Insurance Carriers (self-funded)

Coordination of benefits with MetLife for STD/LTD

Integrated Health Management (Mission:Health) Share WC data with unemployment for contract

employees

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Getting Absent Employees Back to Work

Temporary Job Accommodations• Seek detailed restrictions• Job rotation or alternative assignments• Assistive devices and work station

modifications

Raytheon Works with MD’s• RTW promptly in a medically

appropriate and safe manner• Physician tours of our facilities• Pre arranged fee arrangements for top

notch Dr’s who get it.

Employee

Raytheon

Physician

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The Employer Statement of Job Demands

Outlines the physical requirements of the job

Completed by the employee’s supervisor

Describes potential accommodations

It is NOT a job description

Can be forwarded to treating physicians

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The Lost Time Intervention Team (LTIT)

Medical (RN/MD), HR, Voc Rehab Experts and Claims

Reduced Hours and other accommodations are often used to ease return

Clear communications to the absent employee is an absolute necessity

The worksite Return to Work Planning Forum

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Conclusions

Better service Lower claims cost (especially

expense) Better RTW outcomes through

integration with the business and personal relationships

Innovative forum to develop and create tools for RTW