Employer Attending Settlement Conferences Decreases Work Comp Claim Costs
Who Should Settle the Claim?
For most routine workers' compensation claims, the adjuster negotiates the settlement with the claimant. Sometimes your workers' compensation coordinator or your in-house counsel needs to be involved in the settlement negotiations, especially if it appears the adjuster no longer has control of the claim. One large retailer has a representative attend every settlement conference and takes an active role in the settlement negotiations (with the permission of their carrier).
This is a very effective approach. In fact, the most pro-active approach I've seen recently is the risk manager attending every settlement conference, coming readying to settle the case. He gained cooperation of the insurance company as he initiated the approach, and he now attends the conferences rather than an insurance company representative. His company has a very large deductible and all claims are within that deductible, so essentially it's the company's money.
Sometimes it is not additional money needed to settle the claim, but the alleviation of the employee's fears about what the job future with your company will be after the claim is settled. This is an ideal situation for the employer to be involved in the negotiations. The employer can advise whether or not the necessary accommodation to modify a job to fit the employee's permanent disability restrictions can be accomplished. When the employer takes an active role in discussing the employee's return to work, the benefits portion of the negotiations is easier to conclude.
Remember: There are ADA Considerations when an employee has permanent medical restrictions, so make sure to discuss this with your corporate legal counsel.
In the very large dollar litigated claims with multiple issues in contention, it is almost always best for the experienced defense attorney to negotiate the settlement, rather than for the adjuster or the employer to be involved in the settlement discussion. Of course, prior to your office extending any settlement authority to your defense counsel, you need a detailed report from the defense counsel outlining reasons for the settlement recommendations being made.
The Right Time to Settle
There is an old adage in the insurance business-the longer the claim is open, the more it costs.
In the states where the employer controls the doctor treating the employee, the optimum time to settle the claim is immediately after the employee has reached MMI (Link to definitions) and the doctor gives the employee the disability rating. In the states where the employee is treated by a personal doctor, the settlement negotiations begin immediately upon receipt of the IME disability rating.
If the claim is being litigated, the financial optimum time to settle the claim is when the further cost of defending the claim exceeds the additional amount necessary to meet the plaintiff attorney's demand.
Occasionally, an employee, due to financial reasons or other personal reasons, will be anxious to settle the claim. If a low offer of settlement is received, compared to what could possibly be pain on the claim at a later date, the adjuster should immediately draw up the necessary releases and other documents to meet state requirements. If the state requires the approval of the administrative law judge or the workers' compensation board, the completed documents is submitted to obtain the necessary state approval.
When the adjuster has done a thorough investigation, verified the "specials" (incurred medical, estimated future medical, incurred indemnity benefits, estimated future indemnity benefits and permanent partial or permanent total disability benefits), completely and kept your company informed of the claim status through documented file notes and in-depth Action Plans, your company should be ready to settle when the adjuster is ready to conclude the claim. If the adjuster wants to settle and your company is not to ready to settle, then it is usually because the adjuster has not properly documented the file as to why the settlement is appropriate at this time.
What To Do If Your Insurance Company Wants to Settle But You Don't
When there is a discrepancy between when your company wants to settle the claim and when the adjuster wants to settle the claim, discuss the reasons for the differences in opinion. Usually a discussion resolves the issue(s) causing disagreement. If the workers' compensation coordinator and the adjuster cannot come to an agreement, remember – it is your money and your decision to make except in those few states not allowing employer input. (workersxzcompxzkit)
Let your insurance broker know about the issue(s) so it can be determine if any program changes are needed. If your workers' compensation coordinator and adjuster frequently disagree on whether or not to settle a claim, then it is time to get a new adjuster on your program because your philosophy on claim settlement is not being respected.
Author Rebecca Shafer, President, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. Contact: RShafer@ReduceYourWorkersComp.com or 860-553-6604.
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