Workers’ Compensation

1. Workers’ Compensation American Electric Power Loyd A. Hudson, Integrated Disability Manager

2. Workers’ Compensation Programs Vendor Mgt. Safety Reserving Benefit Coordination Staff Mgt. Vocational Rehab Payment Coordination Return To Work Program Litigation Mgt. On Site Services Surveillance Prescription Mgt. Field Nurse Case Mgt. Bill Re-pricing Company Politics Excess Insurance / Bonding Case Mgt.

3. Cost as a Percentage of Payroll

4. Workers’ Compensation • Federal • State • Sick Leave Benefits • Short Term Disability • Long Term Disability Benefits • ADAAA • Social Security Disability • Accidental Death and Dismemberment • Company Life Insurance • HIPPA • Medicare SCHIP reporting • Cobra Benefits • State Leave Programs • FMLA • Union Agreements • Company Drug and Alcohol Testing • Medical Insurance • Safety Program • Return To Work Program • Vocational Rehabilitation Program • Fitness For Duty (On Boarding) • Employee Assistance Program (EAP) • Medicare Set Asides Benefit Coordination

5. Designated Vocational Rehab Specialist • Predictive Model - RTW Program • Return to work Progression Plans • Integrating ADAAA into the RTW Process Vocational Rehabilitation and Return to Work

6. Return To Work Occupational Non-Occupational

7. Culture shift to promote RTW at all levels • Pro-active progression plans to Increase Restricted Duty • Tracking of employees ability to work restricted • Incorporating ADA into the RTW process • Bringing employees back to work from LTD RTW Initiatives

8. The American Occupational Medical Association's Committee on Practice states that early return to work enhances both psychological and physical recovery. * Injured employees off work longer than six months have only a fifty percent chance of ever returning to their job; if time lost exceeds one year, their chances decrease to less than ten percent. Compensable injuries can take up to four times longer for recovery; they may cost five times more than non-compensable injuries. Early return to work enables the employee to continue a productive life. Early return to work reduces costs of replacing the employee, overtime costs, retraining costs, loss of production and related costs, and improves workplace morale. Early return to work reduces Temporary Total Disability payments. Employees are on the job, earning wages. Early return to work reduces medical costs. The injured employee heals more rapidly, shortening the time medical treatment is needed. Early return to work reduces award costs. The potential for an employee to become totally and permanently disabled is greatly decreased. Early return to work reduces legal costs. Employees are less likely to feel their rights have been violated causing them to engage a lawyer. Early return to work cost reductions will have a direct impact on Workers’ Compensation premium rates AEP Occupation =65days Non-Occupational = 33days *The American Occupational Medical Association, http://www.uwsa.edu/oslp/wc/polpro/rtw.htm

9. Safety Severity Ranking and Percentage of Restricted Duty Top Quartile 80% Restricted Duty 1.9 Days Per Case Second Quartile 62% Restricted Duty 7.2 Days Per Case Third Quartile 58% Restricted Duty 9.4 Days Per Case Fourth Quartile 49% Restricted Duty 13.95 Days Per Case • For every 2.57% more Restricted Duty Cases, save 1 lost work day • Moving from 30% restricted duty to 80% restricted duty would save an average of 20 days per case

10. Employee healing process

11. RTW Progression Plan Opportunity

12. Predicting Work Capacity Employee Physician FCE / IME

13. Presley Reed MDA Guidelines Light = 85.5 Medium = 98 Heavy = 110.5 3.5 weeks more productivity and 3.5 weeks less of sick pay

14. RTW Progression Plan This is a work progression plan approved by AEP supervision, Mr. Employee’s treating physician and the employee to ensure a successful and safe return to work. This plan is designed to progress Mr. Employee through 7 weeks of increased duties to reach his full duty job requirements. The evaluation of the process will be a joint agreement between the supervisor and employee, with the approval of the employee’s doctor, and the employee’s ability to complete the hours and tasks worked, per the agreement. If, at any time, the employee has a concern with the plan, he must immediately report the concern to his immediate supervisor. Jennifer Bash, Claims Specialist, will monitor the progress of the plan and be available to address any concerns that develop throughout the program. Mr. Employee will work in his assigned job, increasing amounts lifted and duties as outlined below: Week 12-13 (10-31-2011 Through 11-11-2011) Week 14-15 (11-14-2011 Through 11-25-2011) Week 16-17 (11-28-2011 Through 12-09-2011) Week 18 (12-12-2011 Through 12-16-2011) Work Progression Plan Approval Signatures Claims Specialist: __________________________ Date: ______ Physician: __________________________ Date ______ Employee: __________________________ Date ______ Supervisor: ___________________________ Date ______

15. Week 12-13 Work 8 hours a day, complete necessary safety and training, then able lift and carry up to 25 pounds continuously, 50 pounds occasionally. Job Task #1: Perform duties in accordance with the company safety rules, regulations and practices and report unsafe conditions and practices. Job Task #2: Loading and unloading of materials, not in excess of 25 lbs. Job Task #3: Ride with line crew as groundman worker. Job Task #4: Re-familiarization of climbing – not to exceed 6-8 feet using Bucksqueeze fall restraint safety belt. **Employee will not be on call-out until climbing recertification has been completed. He may perform overtime if he is on a job and needs to stay until the job is completed.

16. Week 18 Trial period working and performing all functions of a Line Mechanic – A. Following the end of week 18, a fit for duty exam will be scheduled. Upon receipt of successful results of this exam, Mr. Employee will then recertify for climbing and pole top rescue. He can then resume working his normal schedule, including callouts.

17. Documents Trends • Benchmark Against Other • Provides data • Documenting Value Measurement / Value

18. Management Expenses As a Percentage of Disability Costs • AEP Management Expenses are 7.4% Outsourced Functions HR Function On average since 2006 for every dollar cut from the AEP Recovery Center $2 were paid in increased vendor services. 22

19. Expenses vs. Sick Pay Benefits Sick Pay Benefits as a Percentage of Payroll Expenses as a Percentage of Benefits Paid Out • 2002-2005 Benefits Increased, Expenses Decrease • 2005-2006 Benefits Decreased, Expenses Increases • 2006-2008 Benefits Increased, Expenses Decrease • 2010-2011 Benefits Decreased, Expenses Increases • Over All ROI for staff is = 14:1