A Ten Point Guideline for Adjusters How to Handle a Litigated Workers Compensation Claim

Employers must  provide adjusters with a set of “rules” or guidelines clearly showing how they want their litigated workers’ comp claims handled. Following a guideline fosters good communication between the adjuster(s) and employer and ensures all bases are covered.
 
1. Responding to the Complaint
Upon receipt of a litigation notice or an industrial commission hearing notice, the employer immediately faxes or e-mails a copy of the complete litigation notice to the adjuster to handle as an answer to the complaint or to file the request for a hearing with the appropriate court or industrial commission. 
The work comp adjuster contacts the employee's attorney and requests an extension of time to answer the complaint be granted in writing. The extension of time allows the adjuster and the employee's attorney to explore settlement possibilities without incurring defense cost. 
If the adjuster is unable to facilitate a settlement of the claim, the adjuster explores with the employee's attorney the use of arbitration or mediation to resolve the claim. 
If the employee's attorney refuses to agree to an extension of time to answer, or to agree to arbitration or mediation, or if the claim cannot be resolved, the adjuster then refers the claim to defense counsel for the filing of a timely answer to the complaint.
 
2.  Claim Handling
The work comp adjuster reviews the file reserves to be sure they are adequate for the anticipated settlement value of the claim. If an expense reserve for the cost of litigation is needed, the additional reserve are added.
If the employee's attorney is willing to settle the claim, but is demanding an amount greater than the adjuster's evaluation of the claim, the adjuster should consider the overall cost of settling the claim now versus the cost of defending the litigation and obtaining a possible more reasonable settlement later.
The adjuster reviews the complaint to make sure all aspects of the claim are covered by the workers' compensation coverage. If there are any allegations made by the employee's attorney not covered by the workers' compensation insurance, the adjuster makes the employer aware of the possible exposure outside of the workers' compensation coverage. For example: an employer's liability claim, or an ADA complaint.
An Action Plan for the future handling of the litigation is completed and each aspect of the Action Plan is placed on the adjuster's diary for follow-up.
 
3.  Defense Counsel Selection
The adjuster refers the litigation complaint to the defense counsel previously selected by the employer or the employer's insurer. (The time to select defense counsel is before one is needed).
An attorney assignment letter is sent to the defense counsel with the pertinent information from the claim file with a copy of the litigation complaint.   The assignment letter requests a litigation budget in the format previously provided by the employer or the insurer to the defense counsel.    All reporting requirements for the defense counsel are outlined in the assignment letter.
 
4.  Acceptance by Defense Counsel
The adjuster should receive from defense counsel a letter acknowledging receipt of the claim, confirming counsel filed an answer with the appropriate court or industrial commission. The acknowledgment letter also must outline the defense attorney's evaluation of the claim, the proposed course of action and the recommended litigation budget.
 
5.  Litigation Budget
The work comp adjuster reviews the detailed litigation budget prepared by defense counsel. The litigation budget includes not only court time but also the need for discovery, any research or other extra legal expense. If the adjuster has any questions or qualms about the proposed legal expense in defending the litigation, the adjuster addresses the issues with defense counsel prior to the litigation defense proceeding. The litigation budget may also be used to establish or change the expense reserving on the file.
 
6. Further Claim Handling
The adjuster remains responsible for the work comp claim. The adjuster never abandons the claim to defense counsel because it is being litigated. The adjuster performs any additional investigation the defense attorney recommends. The adjuster also hires any outside vendors or experts the defense attorney believes necessary in the handling of the litigation.  The adjuster keeps the employer informed of the status of the litigation and the anticipated outcome. 
While the employer relies on the expertise of the workers’ comp adjuster and the defense attorney, the employer must be willing to offer advice, opinions or guidance, if needed.
 
7. Status Reports from Defense Counsel
All significant developments on the claim are reported by defense counsel to the adjuster. If progress on the litigation is slow, the defense attorney is required to report at least every 90 days on the actions taken to resolve the claim. The defense attorney's status reports cover only developments since the last prior report and do not repeat content of prior reports.   Each report from the defense counsel includes an action plan on how the attorney plans to move the claim forward.
 
8. Directions to Defense Counsel
Each time the defense attorney reports to the adjuster, either by written report or telephone, the adjuster reviews the progress being made on the claim. Extensive discovery, depositions or other time consuming activities are avoided if there is a potential to resolve the workers’ comp claim. The adjuster advises the defense attorney as to the course of action the adjuster wants the defense attorney to follow. The adjuster maintains rapport with the defense counsel while directing the activities on the litigation. Litigation can be best controlled by preparing a set of templates which can be customized for each claim or case.  Documents such as who your company is, how you expect the claim to be handled, possibly even a set of suggested interrogatories.
 
9.  Trials or Final Industrial Commission Hearings
When a trial date or final hearing date is received by the adjuster, the adjuster incorporates the date into the file diary and the file action plan. The defense attorney is directed to provide a pre-trial or pre-hearing report at least 30 days prior to the set date. The adjuster discusses strategy for further handling of the work comp claim with the defense attorney.
If further settlement authority is needed, the adjuster discusses the additional settlement authority with the employer and/or the insurer upon receipt of the trial date or final hearing date, not at the start of the trial or final hearing.
During any trial or hearing lasting longer than a day, the defense attorney provides the adjuster with a daily verbal report on the significant events that have occurred.
 
10. Legal Bills
Prior to the payment of any legal bills through the course of the litigation, the adjuster reviews the legal bills to verify they are in accordance with the litigation strategy and the litigation budget agreed upon with defense counsel. 
If the legal cost is substantial or if the adjuster has concerns about the accuracy or appropriateness of the legal bills, the legal bills are referred to a legal bill audit company for review. (workersxzcompxzkit)
The claim file notes include the receipt of all legal bills and confirmation by the adjuster that the legal bills were reviewed and approved by the adjuster. If there is any question regarding the legal bills, the adjuster outlines in the file notes the steps being taken to resolve the billing question before paying the legal bill.

 

Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers' Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.


Podcast/Webcast: Claim Handling Strategies
Click Here:

http://www.workerscompkit.com/gallagher/podcast/  Claim_Handling_Strategies/index.php 
 


Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.
 
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.

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