Using the MOD as a qualifier is nothing new on  certain construction contracts.  What is interesting is when a contractor uses the MOD as a qualifier across multiple states.

I recently ran into a large company based out of Michigan whose bid qualification includes a maximum Experience Modification Rating of .90

This is troublesome as the contractors home state of Michigan isn’t an NCCI state. What does that mean?  It means the experience MOD in Michigan isn’t like 32 other states in the Union that follow the same calculation produced by NCCI.  To see the states that use NCCI or another authority, click here. Now, what does this mean to you?  This should be very concerning to you if you’re bidding a job with the experience MOD as a factor in any capacity!  Is this number truly reflective of a company’s safety record?  Are you at an advantage or disadvantage based on where you or the contractor is located?  Are any of the claims affecting your MOD pending subrogation?  While the MOD can tell you a lot, it’s not always the whole story!

Let’s take a look at two contrtors.  Lucky Construction and Not So Lucky Contractors.  (hmm, wonder where this is going!)

Lucky Construction is based in Michigan and bidding a job in North Carolina.  Their competition on the bid is Not So Lucky Contractors out of Maryland.  Coincidently, both contractors had the same classcodes and the exact same payrolls in each of those classcodes for the last three years on their experience MODs.  They’ve had no claims in the three years reported for their MOD calculation (both NCCI and Michigan use 3 years data*).  As fate would have it, both companies also put identical bids and both look ready and willing to take on the job!  In this case, the award is going to go with the “best performer” as shown by the Experience MOD!

Let’s see the E-Mods!

 Take note- all classcodes and payrolls match.  The D-Ratio’s don’t match, and wouldn’t as this data is specific to each state and classcode based on overall performance of others in the same classcode!

There it is!  You’d expect a slight difference based on the unique Data in each state, but a spread of six points is more than a slight difference!

And the award goes to Lucky Construction in Michigan! Way to go guys, you’re keen safety awareness has paid off!  Sorry Not So Lucky Contractors, if you were more like Lucky Construction you could have had this job!

See the problem?

The point is, take extreme caution when looking and bidding jobs when the experience MOD is a factor.  Are you competitors using the same qualifying factors?  Is the prime contractor aware of the possible different rating factors at play?  If you have claims that have affected your EMR, were they even  your fault?  In every state, Workers’ Compensation is the primary carrier.  That means, they’re first to pay the claim to make your employee whole again.  We’ll get into more of these examples on another post!

*Exceptions to apply.  Refer to state rating manual for more details