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There is a direct relationship between employer practices, disability management, and workers' compensation claim experience. Combating what many deem to be a "system out of control," some employers, in partnership with insurance companies, are taking control of their workers' compensation costs. This partnership has shown that effectively managing employer practices significantly reduces human and financial loss, resulting in a "win-win'' situation for both employees and employers.We begin this chapter with a synopsis of the forces shaping the present workers' compensation system. We then demonstrate a model under which employer initiatives can be used to control skyrocketing workers' compensation costs. Finally, we present data that show how this approach has helped employers gain control of the occupational stress factors that serve as the foundation of their workers' compensation costs. The Workers' Compensation System: What Went Wrong?Nearly 100 years ago, lawmakers established the workers' compensation system as a "no-fault system" to compensate injured employees. The system represented a trade-off: Employees would receive medical and lost-wage benefits for any injury incurred within the course and scope of employment. In return, employees forfeited the right to sue their employers for negligence.For the majority of employees, the workers' compensation system works reasonably well. Statistics show that approximately 90% of injured employees return to work within 6 months (Wolff, 1990). However, those same statistics show that 25% of injured employees receive 75% of the benefits paid. This smaller group, many of whom miss more than 6 months of work, devour billions of dollars in resources annually. These costs continue to escalate, leading many to believe that workers' compensation is in crisis.We would like to express our sincere thanks to Tim Fletcher and John Kamp for comments and suggestions on earlier versions of this chapter and to Cindy Wettschreck for help with the graphics.

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