How Well Are Your Claims Performing?

Keeping tabs on your financial books is probably the utmost important task for any business owner and/or organization.

 

In the event you are “loose” so to speak with the books, you can quickly find you and your company or organization in quite a financial pickle. With that said, not only should you be measuring the financial performance of the business you oversee, but also that of your employees and quite frankly yourself.
On way to go about making sure you’re properly self-measuring your performance in the workers compensation arena is by setting a number of benchmarks.

 

In the event you hit or surpass those benchmarks, things should be in good hands for you. If not, you certainly by all means have some work to do.

 

 

Review Your Efforts

 
As part of what should be in an annual “review process” for your business or organization, review your financial numbers and overall work performance. If things are not where they need to be then set a goal by the time your next review arrives to get them there or beyond.

 
Among the benchmarks to look at:

 
Claim Financial Benchmarks – With this, review the changes in the average claim expense. Use a comparison of the typical expense for medical benefits, indemnity benefits and claim expenses. The data should not be hard to obtain, and it gives you the ability to compare your claim expense with the prior month and quarter, along with the previous year among other time periods;

 
Average Claim Expenses Within the Industry – One facet you want to key in on is your typical claim cost is representative of others in your business sector. When looking for relative data, keep in mind that a number of bigger TPAs and sizable workers comp insurers have a portion of data available. The National Council on Compensation Insurance (NCCI) does gather payment statistics in the 35-plus/minus states wherein they are active;

 
Ratio for reserves and payments (three months before closing) to final claim expense – When you compare what the adjuster has compiled for reserves along with claim payments made three months before the claim closing date, with the final figure paid for the claim, you can better determine the accuracy for your large claim reserve. [Exclude the claims closed in less than 180 days]. The ratio of reserves along with the dollars previously paid on the claim, to the final claim cost should be about 1.0. In the event the ratio is below 1.0, the overall claims are under reserved. If the ratio is higher than 1.0, there is on average additional funds sitting in reserves.

 

 

 

Claim Handling Process Benchmarks

 
While there are a variety of options to gauge your claim handling, here are some suggestions for measuring claim-handling performance:

 
Average bill process time –Here you will have a comparison of days between the date the medical bill, legal services bill or other cost was obtained in the claims office, and the date the payment in fact was processed. This permits you to measure the timeliness of your bill payment process and gauge the progress provided by your staff.

 
Closing ratios – This is the ratio of files open during each month, quarter or year in comparison to the files closed during the same time frame. The goal here is for a figure of 1.0 or better.

 
Percentage of closed files with payments higher than $1,000 – This indicator is set to make the claim office honest on the closing ratios. Unfortunately, it is too easy to manipulate closing ratios, so this gives you the claim office close files prematurely when the number of closed claims with payment increases.

 
Average time to input initial reserve – Even though different claim offices have different standards as to how quickly the initial reserve should be in the computer system, by comparing the present average length of time to a previous month, quarter or year, you can gauge how soon the adjusters are inputting initial reserves.

 
Files on diary – This involves measuring the files that are being actively worked on the diary. Ideally, the claim office has every file on diary to prevent the files from stagnating.

 
Files with missed diary – This benchmark can in turn be a list of the files where the diary has not been updated the diary due date has passed, or it can be a percentage of the files for a claim handling due date that has since expired. This provides you with insight into how current the claims office is in when it comes to handling of the claims.

 

 

Your company’s claims’ performance should always be of importance to you.
If you are falling behind in this arena, you very well could see your financial books go from black to red in a short amount of time, something no business owner or organization will want.

 

 

 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:RShafer@ReduceYourWorkersComp.com.

 
Editor Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: mstack@reduceyourworkerscomp.com.

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

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SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

TPA Best Practice: Accountable Facilitator Of Claims Outcomes

Regardless of the employer’s size and operational locations, the complexity of navigating all aspects of workers compensation can be overwhelming. Your TPA may offer a number of solutions, but are you aware of these services? Are you leveraging them to your advantage? In a large organization a risk manager can feel lost and not know who to contact for a resolution.

 

A best practice in a TPA service offering is to provide coherent and consistent services that allow the client to understand their options and create a return-to-work and claim resolution program that fits their individual business needs. This is done through a single, accountable, point of contact that is the chief facilitator in understanding and delivering on client expectations.

 

 
What Does an Effective Model Look Like?

 

Traditional workers compensation programs have failed to provide the employer clients this single, accountable, point of contact in managing all aspects of workers compensation. The roles this person plays are as follows:

 

 
• Facilitator

 

Understanding and delivering on client expectations is key for any successful TPA. Having a facilitator that is a subject matter expert on both the service offerings of the TPA, as well as the client account instructions will deliver the most beneficial outcome. He will act as a matchmaker to give recommendations for the correct mix of services to deliver on client expectations. This creates an informed consumer that is in a position to make effective decisions, as well as create a communication point to continuously monitor client objectives.

 

The Facilitator also acts as a liaison to the claims and clinical staff at the TPA. Having intimate knowledge and communication with the client, the Facilitator is able to give guidance to their staff of client expectations and outcomes. Their accountability to the client leads to holding their own staff accountable, as well as lends support and guidance to ensure their team is on track for the client deliverable.

 

 
• Educator

 

Another element of an effective TPA is one that can provide the necessary education clients need in the adversarial and complex workers’ compensation system. For example, the program must be able to guide and mentor clients on how to deliver resources to claim and clinical teams. This translates into innovative solutions for clients, and meets the challenges in return-to-work programs. It also provides a conduit for building effective programs in the areas of disability and absence issues in the complex matrix of state and federal laws governing these issues.

 

 

• Clinical Vocational Expert

 

The struggling economy and graying of the American workforce has created unique challenges in managing injured workers. While the number of work injuries per capita is declining, current trends demonstrate an increased severity in injuries that occur in our workplace. This is resulting in employees missing more time from work, especially in the older populations. Employers need to investigate and select a TPA that is able to provide guidance to nurse case managers and reviewers so they can meet these challenges.

 

The clinical vocational expertise adds the consistency across the board in working with medical diagnosis and treatment plans. The field of medicine is complex and ever-changing. It is unrealistic and inappropriate for a claims person to be an expert on medicine. It is appropriate and highly effective when the claims handling expert receives clinical support from the Clinical Vocational Expert.

 
Benefits of a Single Point of Contact

 

The main challenge risk managers face in today’s complex business environment is the need for simplicity that delivers an effective disability and absence management program. An effective TPA must have a single, accountable and knowledgeable point of contact to drive the return-to-work and claim resolution process. This single point of contact must also draw on experience and expertise to drive innovation in a collaborative manner that includes the employers and brokers, and provide medical and vocational solutions that drive quantifiable results.

 
Conclusions

 

Due to a changing workforce, employers need to seek innovative ideas that provide practical solutions in a cost-effective manner. Based on these factors, employers need to seek and utilize a TPA that offers tools that can be easily implemented for a more productive workforce.

 

 

 

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php

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WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

 

Why Under Reserving Can Lead to Problems

Running a business in today’s economic world involves various factors that can keep even the best of business men and women awake at night.

 
One of the keys to any successful business operation is making sure that the financial ledger stays in the black and does not dip into the red. If it does the latter, getting it out of there as quickly as possible is crucial.

 
With that in mind, under reserving is a topic that all businesses should be aware of.
To put things in perspective, keep in mind that a workers compensation claim is in fact a legal obligation. In turn, a claim reserve is a prepared estimate for what the workers comp claim will in fact cost.

 
At the point where the adjuster overseeing the workers comp claim places a reserve on the claim file, it then is a definite monetary figure that is set aside to compensate the expense down the road of the workers comp claim.

 
In viewing things through the accounting window, the claim is an incurred liability, this even though it will be paid down the road. At the time the adjuster establishes the reserve, the business is then denied the ability to use a monetary figure that was set aside to compensate the workers comp claim.

 

 

 

When Reserves Go Bad

 
A company’s financial status will change at the point when there are inaccurate reserves.
In cases where you have reserves at too high a level, funds the business could put to use in other avenues of the company prove no longer available. In instances where the reserves turn out to be too small, the business must deal with an under-funded liability, leading to a shortfall over time.

 

So, what is the worst scenario of the two presented?
In many cases, financial experts will state that being in an under-reserving position is the worst of the two scenarios, with a simple reason being that the self-insured business owner or the insurer itself needs to have reliable reserves in hand to handle their financial responsibilities.

 

 

Ratings Can Be Impacted

 
Another reason why this can hurt businesses, especially the insurer itself, is company ratings.

 
The better-known rating firms like A.M. Best, Standard & Poor’s, and Fitch Ratings calculate the monetary stability of insurance companies by gauging their ability to meet their claim responsibilities. If their available surplus falls to an unacceptable level, their financial stability rating falls too.

 
Another thought to keep in mind regarding under reserving is the impact on the calculation of premiums down the road.

 
The reserves for the open claims are a portion of the calculations in establishing the loss experience of the business. In the event a loss experience is under stated due to the fact the reserves are understated, the insurer will be charging inadequate premiums.

 
When this happens, you end up with lower profits for the business.

 

 

 

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php

MODIFIED DUTY CALCULATOR:   http://www.LowerWC.com/transitional-duty-cost-calculator.php

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

Watch For Warning Sign On Head Injury Claims

I had lunch with a nurse case manager not too long ago and we were discussing misdiagnosed conditions. She mentioned to me a case she had recently, where a worker struck his head on the frame of his hi-lo he was driving. He was off work a few days, diagnosed with a head contusion, and sent back to work. He later had some difficulty with dizziness and headaches, to which doctors advised it was probably a mild concussion.

 

Why Would The Adjuster Fight Nurse Case Manager Opinion And Resist A Second Opinion?

 

Since the nurse had spent more time with the patient than the doctors, she wanted to get a second opinion. The worker’s wife mentioned to her some issues with attention and minor memory issues. These issues were not brought up to the doctor by the patient himself. To her dismay, she had to fight the adjuster a little bit (Adjuster mistake #1) but in the end she sent the worker to an occupational doctor that had some sort of additional qualification in traumatic brain injuries. It turned out after some testing that the diagnosis should have been a mild traumatic brain injury. After some rest, medication changes, and some modified treatment methods the worker was doing a lot better and showing signs of improvement.

 

On the way home I was thinking about why the adjuster would resist getting anther opinion in a head injury case such as this. Especially with blows to the head, an adjuster should never limit themselves in getting opinions–especially if directed by their own nurse case manager.

 

Chances are the adjuster did not want to face the fact that this injury may have been more complicated or more severe than they first thought. Chances are also that this adjuster may not have wanted to escalate this claim into being one that required a reserve increase or one that drew more attention to it from their managerial staff at the carrier. Since the adjuster would probably be in trouble for not reserving the claim properly from the get-go and for not keeping an open mind to other complications, you would think it would be worse to just pretend the problem does not exist.

 

 

 

Early Intervention Is Key to Any Head/Brain Injury

 

In any type of brain injury, early intervention and treatment is key to a successful treatment plan. The worst thing to do is ignore the warnings signs. These could be persistent headaches, dizziness, memory issues, speed of task completions, and so on.

 

 

Watch for the Method of Injury

 

A tip to watch for while evaluating a claim for brain injury involvement is the method of injury itself. Any case where the head was struck by an object should be a red flag, but my conversation with this nurse shows that for some adjusters a head injury can go under the radar.
Watch for Injured Worker Complaints

 

Even if some diagnostic testing results were to be normal, I would put more emphasis on the injured worker’s complaints themselves. Sure, you have to consider malingering to some extent, but when you weigh the severity of the accident itself against what incentive the worker has for secondary gain, this is hat the job of the adjuster entails.
Don’t Be Afraid To Ask for A Second Opinion

 

Don’t be afraid to reach out for second opinions early in a claim. Neuropsychological testing, diagnostic testing, and other physician opinions are all going to help you put the pieces of the puzzle together.
Talk With Spouse of Partner of Injured Worker

 

Another important resource often untapped is conversations with the family or significant other of the worker. They are going to tell if the worker is behaving differently after the injury when compared to their normal behavior before the accident. There is no rule that says you cannot talk to the wife or partner of the injured worker. If you as the adjuster can reach out to them, and even set up an appointment to talk with the worker along with their family early on in the claim, it can provide valuable insight as to any injury side effects
Make Sure Injured Worker Reporting All Symptoms To Their Doctor

 

Another thing to watch for is the injured party not telling the doctor all of the symptoms he or she has. Sometimes people just want to get back to work, and they could downplay their symptoms in order to just get back to work. They are not helping themselves by doing this, and they could be putting other workers in danger should they have a traumatic brain injury that is undiagnosed and untreated.
So take your time and do a thorough investigation early on with any head injury claims. Look for the warning signs, and do not be afraid to get additional recommendations and a handful of diagnostic tests. Most importantly, listen to the concerns of your nurse case manager. You could stop a potential bad claim from happening in the first place.

 

 

 

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php

MODIFIED DUTY CALCULATOR:   http://www.LowerWC.com/transitional-duty-cost-calculator.php

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

 

Important Points to Include in Account Handling Instructions

Account handling instructions inform insurance adjusters on how to handle a company’s workers’ compensation claims. Every insurance company or third-party administrator (TPA) has them, although they may refer to them by different names. Account handling instructions are also called “account service instructions” (ASIs) or “special account instructions.”
Make sure you have input into the preparation of these instructions. Items you want in your ASIs will vary depending on the carrier or TPA’s best practices. The following items are taken from our Workers’ Comp Kit’s Improvement Plan.
Don’t be afraid to negotiate for the terms you want in your account handling instructions. If you have a guaranteed cost program, you will not have as much leverage as if you are self-insured or in a large deductible program, but don’t let that stop you from trying to get what you want.

 

Make sure to look at least the following items on your ASI Checklist:
File Management

 

  1. Can you change your account instructions?
  2. Can you review the complete original claim file?

 

Bill Review

 

  1. Do you see copies of all payments made on each open file?
  2. Do you review for accuracy checks or an itemization of all payments made?
  3. Are statements recorded on all claims where compensability is questionable such as heart attacks, stress claims, unusual injuries or claims where liability is not clear?
  4. How and when are medical bills audited?
  5. What levels of hospital bills are audited?
  6. Who will audit these hospital bills?

Referrals to Physician Consultants and Medical Advisors

 

  1. How are outside vendor services activated and coordinated?
  2. Are all medical records sent to a Medical Advisor before scheduling an independent medical examination (IME)?
  3. Does a doctor write an IME cover letter?
  4. Does a doctor make sure the timing is appropriate for an IME?
  5. Does your company decide if medical case management is warranted?
  6. Is there an immediate and automatic referral of complex lost-time cases to medical case management?

Reporting

 

  1. How often do you receive status reports for open claims from your insurer?
  2. Is the reporting period for 30, 60 or 90 days?
  3. Even though you may have been provided access to run reports, can you request the insurer to run them for you?

Reserves

 

  1. Are you provided with a written explanation each time the insurer raises reserves over $10,000 or more?
  2. Does the reserve amount take into consideration things like your company’s aggressive return-to-work program, which may result in lower wages lost?

Dedicated Adjuster

 

  1. How many adjusters are dedicated to processing claims for your account?
  2. Does the adjuster have a full-time administrator? One adjuster with a full-time administrator can handle more than an adjuster without an administrator.

Investigations

 

  1. How do you request investigations?
  2. Will you receive copies of investigation reports and videos?
  3. Are emergency room records always obtained for every worker treated there?

Structured Settlements & MSA Set-Asides

 

  1. Do you consider structured settlements for all cases over $25,000?
  2. Are Medicare set-aside (MSA) settlements structured?
  3. Who handles compliance for these types of settlements?

Subrogation

 

  1. Are all cases reviewed for subrogation potential?
  2. Who closes a file and waives subrogation recovery?
  3. Are you consulted before a lien is waived or compromised?

Utilization Review

 

  1. How do you decide which bills and services are reviewed?
  2. Who provides this service?

Referral to Vocational Rehabilitation

 

  1. Who decides if a referral should be made to vocational rehabilitation?
  2. Are complex lost-time cases automatically referred to vocational rehabilitation?
  3. Will voc rehab reports be sent to your company?

Legal Issues

 

  1. Who selects legal counsel?
  2. What type of legal counsel is used- panel or outside counsel?
  3. Are your attorneys members of the Council of Litigation Management? See http://litmgmt.org.
  4. Is alternative dispute resolution (ADR) considered on all claims?
  5. Are you or your subrogating insurance carriers members of the non-profit Center for Public Resources that avoids litigation and pursues ADR? If so, is this noted?
  6. Do you receive copies of bills for legal services?

Settlement Authority

 

  1. Who has the authority to settle a claim? Whether your company or the insurance adjuster has the authority to settle a claim can make a big difference in your bottom line. How much authority you get depends on the type of insurance program you have.

 

 

 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:RShafer@ReduceYourWorkersComp.com.
Editor Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: mstack@reduceyourworkerscomp.com.

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php

MODIFIED DUTY CALCULATOR:   http://www.LowerWC.com/transitional-duty-cost-calculator.php

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

 

 

Ethics In Insurance Claims Negotiations

In the fast-paced world of workers’ compensation claim management, we are challenged on a daily basis with ethical issues and dilemmas. While we all understand the difference between right and wrong, ethics present continual gray areas we must confront to protect the interests of our employer and its insureds.

 

 

What are Ethics?

 

According to the Webster-Merriam dictionary, ethics are:

 

• 1: the discipline dealing with what is good and bad and with moral duty and obligation

• 2a : a set of moral principles : a theory or system of moral values <the present-day materialistic ethic> <an old-fashioned work ethic> —often used in plural but singular or plural in construction <an elaborate ethics> <Christian ethics>

• 3 plural : a set of moral issues or aspects (as rightness) <debated the ethics of human cloning>

 

As you can see, the challenging thing about “ethics” is that it is derived from a system that is dependent on the values and beliefs of the individual. The correct answer of what we should do is often muddied by the human condition and the adversarial process of resolving workers’ compensation claims.

 

 

Ethical Approaches to Negotiations

 

While the workers’ compensation system is premised on the idea of “no-fault” injury, this often leads to a high level of contention when trying to resolve disputed cases. This results in different approaches a claim handler can take when trying to resolve those cumbersome files.

 

• Sportsman Approach: The system is a game of chance. When does bluffing and puffery cross the line?

• Do the Right Thing: While this approach tends to avoid bluffing, it is more direct. However, the subject is often changed when a weakness in one’s case becomes an issue.

• Hybrid Approach: Combines the two approaches, but sometimes requires you to go “all in” when the stakes are high or rise past our personal comfort level.

 

 

Unfair Claims Practices and Consequences

 

Failing to deal with injured claimants in an unfair and unethical manner leads to countless issues. These practices are often characterized by the following traits:

 

• Failure to thoroughly investigate
• Exploiting the financial vulnerability of the policyholder
• Making unreasonable demands on the policyholder during claims
• Claims “extortion” – e.g.—accusing the policyholder, without reasonable basis, of wrongdoing
• Spoliation of evidence

 

The list is endless. The consequences can also include, but are not limited to, judicially imposed sanctions, admissions of evidence and other civil/criminal penalties. For the claim handler, it could also include loss of license, job/promotion opportunities and reputation.

 

 

Effective and Ethical Claims Handling

 

An ethical claim handler needs to be proactive on a daily basis. Part of the process includes following best practices on claims investigation, established rules of conduct and the law. They should also be aware of rules regarding proper witness investigation, policies regarding required filings/paperwork and issuing good faith denial.

 

It is also important to be aware of other intangibles that promote a zealous protection of the insurer’s interests, yet at the same time consider the rights of the injured party.

 

• Know what is not negotiable
• Be honest and avoid parsing words for personal gain
• Keep your promises
• Have multiple options/think outside the box
• Be able to say NO!/Know when to walk away

 

 

 

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php

MODIFIED DUTY CALCULATOR:   http://www.LowerWC.com/transitional-duty-cost-calculator.php

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

 

What Is Your Workers Compensation Claim Worth?

Risk managers frequently ask “what is the claim worth” when trying to get an idea of the long term cost of a severe injury. A competent workers’ compensation adjuster will only provide a dollar range, not an exact value, as the final cost of a major injury is often not known until the claim is totally concluded, which can be years in the future.

 

 

Factors That Impact Total Cost of Claim

 

There are many factors that come into play when trying to estimate the total cost of a workers’ compensation claim. Factors that always impact the total cost of the claim include:

 

• The nature of the injury

• The extent of the injury

• The skill of the medical provider

• The use of ancillary services – diagnostic, hospitals, therapy, pharmacy, etc.

• The motivation of the injured employee

• The compensation rate (including maximum and minimum amounts, if applicable)

• The length of the disability

• The jurisdiction where the workers’ compensation claim is pursued

• The permanency rating assigned by the medical provider

• The permanency rating assigned by an independent medical examination

 

Other issues or factors that may impact the total cost of the claim include:

 

• The quality of the adjuster’s claim investigation

• The value of potential future medical cost

• The potential for future wage loss

• Death or funeral benefits

• Rehabilitation costs

• Disputes over any aspects of the claim that create legal costs

• Preexisting disability

• Preexisting medical issues

• The ability of the adjuster to recognize the strengths and weaknesses of the claim during settlement negotiations

 

 

Skill of Adjuster & Actions of Employer Have Big Claim Cost Impact

 

While all of the above factors impact what the claim is worth, there are two other aspects of the workers’ compensation claim that have a big impact on the overall cost of the claim. They are:

 

1. The skill of the workers’ compensation adjuster handling the claim

2. The actions of the employer in controlling the cost of the claim

 

 

Adjuster Should Speak Multiple Persons With Knowledge Of The Injury

 

The adjuster’s skill comes into play when the claim is first reported and impact the claim throughout the course of the claim. Upon receiving the claim, the adjuster should immediately contact the employer and interview the person with the most knowledge of the claim—the employee’s supervisor, co-worker(s) present at the time of the injury or the first person the employee reported the claim to. A mistake often made by adjusters is contacting only the person who reported the claim to the claims office, not the supervisor, co-worker or other person who has the most knowledge about the injury.

 

After obtaining the employer’s information first hand, the adjuster should immediately contact the injured employee. A detailed review of the employee’s action right before the injury and a detailed review of how the injury occurred will assist the adjuster in determining if further investigation is needed, in determining the compensability of the claim, or the subrogation potential.

 

The immediate contact with the injured employee not only allows the adjuster to obtain the most accurate information to handle the claim, it also allows the adjuster to establish rapport with the injured employee and establishes the adjuster as the go-to person for any questions or problems the employee has during the course of the workers’ compensation claim.

 

 

Adjuster Can Prevent Claim From Being Expanded

 

By completing a proper investigation into the claim, the adjuster can prevent the claim from being expanded later to include unrelated prior injuries or health issues of the injured employee. The properly completed investigation also prevents claims of questionable compensability from being accepted.

 

After establishing rapport with the injured employee during the initial contact, the adjuster should maintain on-going contacts with the employee to deal with any problems that develop during the course of the claim. By working with the employee throughout the course of the claim, the odds of the employee retaining an attorney to assist with the claim (and inflating the claim cost) are diminished.

 

 

Employer Plays Significant Role In Workers Comp Cost Containment

 

The employer’s actions also have an impact on the overall cost of the claim. There are many actions an employer can take to reduce the cost of the claim, including:

 

• Protective clothing and gear that reduces the severity of an injury (or better yet prevents the injury from occurring)

• Immediate arrangement for medical treatment when the injury occurs

• Advising the initial medical provider of the availability of modified duty work when there is any possibility that the injured employee could do any type of sedentary work

• Immediate reporting of the claim to the claims office

• Same day as the injury follow up with the employee, after the initial medical treatment, to arrange for modified duty work, if appropriate

• On-going contact with the employee until the medical treatment has concluded and the employee has returned to unrestricted work

 

The experienced adjuster will combine all the above factors to provide an estimated range as to what the claim will cost. At that point, the adjuster will be able to answer with a reasonable degree of certainty what the claim is worth.

 

 

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php

MODIFIED DUTY CALCULATOR:   http://www.LowerWC.com/transitional-duty-cost-calculator.php

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

Why A Simple Slip And Fall Claim Is Not So Simple

I think a lot of adjusters believe that a slip and fall injury is an open/closed kind of case. The worker was ambling along during work duties and then slip/fell and was injured. Pretty easy!

 

There is a lot more to the story. Many claims professionals who do not thoroughly investigate a slip and fall are losing out on a potential subrogation chance. They are also potentially accepting a claim that they do not have to, depending on the jurisdiction.

 

 

 

Double Check Legal Defense Options

 

In some states, you have an idiopathic fall claim defense, loosely meaning that if you fell because you are clumsy then that is not exactly in the course and scope of your employment. There is no mechanism that caused the injury, such as water on the floor or a coworker that bumped in to you. This defense does not fly in all states, so be sure to check with local legal Counsel before accepting a claim where a worker just fell and has no idea how or why they fell.

 

What kind of shoes or boots were they wearing? Did the worker have the proper approved footwear for the workstation or area that they were working in? If not, this could be a company policy violation or a safety violation. This also is not applicable in all states so confirm with Counsel again if there are issues in this area that contributed to the fall.

 

 

 

Subrogation Options

 

 

Did Floor Cleaning Company Post Adequate Signage?

 

Did the worker fall due to the negligence of a vendor that was on premises at the time? If so, you have a clear subrogation case to pursue. For example, if a floor cleaning company was in the area and did not properly rope the area off or they failed to adequately post proper signage that the floors were wet, this is an issue. If that is the case, the vendor has a duty to properly protect and advise other workers in the area that they are cleaning and that floors are wet. Failure to do so is a pretty big deal and presents an avenue to fight the causal relation of the case in general.

 

 

Did Outside Vendor Properly Maintain Machine That Leaked Fluid?

 

Did a machine leak fluid onto the floor where the worker fell? If so, who maintains the machinery? If you use an outside vendor, you may have another subro case to pursue. If you maintain your own equipment, what caused the failure to begin with? If it is more of an engineering flaw more than a mechanical flaw, you have another way to look in to a subro recovery case to help recoup claims dollars spent.

 

 

Was The Claim Properly Investigated?

 

Did you properly review onsite camera footage to see if the worker fell in the way they described it? If you do not have cameras onsite, this is another chance to thoroughly investigate a claim if there were no direct witnesses to what happened. It may not be a slam dunk every time, but even if you were to prove one case as not being legitimate, then the cameras more than paid for themselves.

 

If there were direct witnesses, did you take a statement from them in regards to what happened? Oftentimes adjusters will ask if a coworker witnessed a fall, then they will fail to follow up on taking a statement. If you do not talk to the witness, why even ask for their names? This is a failure to properly investigate the claim, and overall it is a big no-no in claims investigation 101.

 

Was the worker supposed to be in the area where they fell? If not, this again is a safety violation and a way to dispute the case in general. If workers are not to be inside the yellow-marked lines, then go inside them anyway and get injured, I think that falls in to willful misconduct. If you go somewhere you are not supposed to be, then get hurt, why is that an acceptable work comp case? If you shove your arm in to a machine and it amputates it off, this is really no different. It comes down to the fact that you were doing something you were not supposed to do. If you are breaking safety protocol, that is not exactly being in the course and scope of your employment.

 

Did the employer complete a proper onsite investigation after the injury occurred? If not, then they failed to help themselves. Too many times employers fail to properly investigate their own losses before reporting them to their carrier. This fact is probably the biggest culprit in proper slip/fall investigation, and one that is easily fixable. The employer is right there on the scene, they should be the first people looking to see if there was water or oil on the floor, and why it was there to begin with.

 

 

 

Make Sure All the Facts Make Sense

 

All of these factors come in to play at some point in the proper investigation in to a slip and fall injury work comp claim. All points may not be applicable all at once, but each adjuster has had scenarios where the facts just didn’t make sense, but instead of questioning everything and doing an in-depth investigation, they just accept the claim. This is not acceptable. The job of the claims adjuster is to put the pieces of the puzzle back together. If after doing so the claim just doesn’t add up, then why are they accepting the claim to begin with?

 

 

 

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php

MODIFIED DUTY CALCULATOR:   http://www.LowerWC.com/transitional-duty-cost-calculator.php

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

Breakdown in Communication and Expectation Leads to Claim Disasters

Pretend for a second that this is a headline/title of an article in a magazine:

 

Workers Comp is a broken, maimed, dated system. It is set up to protect employers and insurance companies. It shifts the burden and the blame of occupational accidents to the employees while at the same time protecting employers under exclusive remedy and/or tort recovery.”

 

I hate to admit it but that would get my attention. Not only would I raise an eyebrow at that but I would be chomping at the bit to see what would be coming in the following paragraphs.

 

Now, turn the page and imagine seeing this as the headline that follows:

 

“Workers Comp helps employees with injury recovery, top medical treatment, expedited claims processing, and an allowance of return to full wage work before medically released to perform regular duties.”

 

That doesn’t bait me as much as the other paragraph, but I am still a little interested. The truth is that both of these statements ring correct in some capacity. They also both grossly stereotype workers comp at the same time, depending on which side of the case you are on.

 

 

Workers Comp is a System

 

In my opinion, work comp is a system. It is a system that has been around a long, long time. It has failed to really evolve with the times until recently in some states. It protects employers from tort action and third party pain/suffering lawsuits in exchange for claimants to receive medical treatment and wage recovery. Injured workers also receive free help from nurse case managers, vocational experts, surgeons, therapists, transportation professionals, etc.

 

There are issues with both parties. Employees feel pressure about conforming to the work comp system, and fight to get what they think—or what they heard—or what they Googled–they are entitled to. Employers and Carriers feel pressure to move these claims along to resolution to get claimants back to work as soon as possible. Adjusters have tools to get to the bottom of injuries and to defend their employer client from cases that are not acceptable under applicable comp statutes in the State of jurisdiction.

 

Both sides have made the system what it is: a dysfunctional relationship.

 

 

Clear Communication and Expectations See Successful Results

 

However, this is not the case example with every carrier/adjuster/employer/claimant. In those cases where there is clear communication, clear expectations, and clear examples of patience and of teaching, you see something different. You begin to see a partnership between all parties. The employee that can no longer return as a welder now discovers that he has to turn over a new leaf. With the help of a vocational expert they discover that teaching is the real passion. The adjuster helps to facilitate providing the training program and this partnership results in said worker securing a job with a new employer. The pay is not as much, but clear communication between the adjuster and the claimant showed that settlement of the partial wage loss was the best option for all parties.

 

The jaded reader of this will think the above example is a rarity in the claims world. But I think that every adjuster has had a few successes in their careers. And if every adjuster has had a few of these cases, that means there has been a lot of successes.

 

 

 

Breakdown in Communication and Expectations Leads to Claims Disasters

 

But there are also examples of claims disasters as well. One of the main contributors to a claim disaster is a breakdown in communication and a breakdown of expectations. As soon as this relationship crashes, the rest of it comes crashing down as well. Both parties become suspicious of secondary gain, of breaking the rules, and of skewing the truth. Every adjuster has some examples of these types of cases as well, and there are tons going on right now.

 

Studies have shown that fraudulent claims are not the norm, and that disputed claims are the minority of the claims caseload. I think the number hovers around 10% or less that fall in to this category. So that means the other 90% are legitimate claims. So why is this bad relationship aura so prevalent? Why is the default opinion that the comp adjuster is “Just out to send me back to work. I am hurt–don’t they understand?”

 

The answer is poor communication. We preach about the importance of communication between all parties all of the time including the adjuster, employer, claimant, nurse, and doctor. The adjuster has the job of making sure all parties are communicating. If there is a breakdown in the process, the adjuster has to step in and fix it and then smooth it over with the offended party. Failure to do this makes the adjuster’s job more difficult, sending the claim sliding in to Disaster-ville.

 

It is just another aspect of the profession of the claims adjuster–playing the peacemaker. One of the 9,000 things that adjusters do every day, on every claim, for every client big or small. The better the peacemaker, the better the communicator, the better success for the adjuster.

 

 

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php

MODIFIED DUTY CALCULATOR:   http://www.LowerWC.com/transitional-duty-cost-calculator.php

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

Undocumented Workers Eligible for Workers’ Comp Benefits

In November, 2013 the Iowa Supreme Court ruled in the case of Staff Management v. Jimenez that undocumented workers can receive workers’ compensation benefits. Pascuala Jimenez, an illegal immigrant from Mexico, had two hernias while on a job assignment in 2007 through the temporary employment agency Staff Management. In January 2008, Staff Management fired Jimenez because she did not have authorization to legally work in the United States. In November 2006 the agency was notified through e-Verify, a federal program that verifies employment authorization, that her name and social security number did not match social security records. Jimenez claimed she was terminated because of her injury.

 

 

Undocumented Workers Do Not Preempt Workers Compensation Law

 

In July 2009 Jimenez applied for workers’ compensation claiming that her ongoing health problems stemmed from her initial hernia surgery. A workers’ compensation commissioner ordered Staff Management to pay for her medical expenses and future medical care. Staff Management appealed the ruling, arguing that Jimenez was ineligible for benefits because she was an undocumented worker.

 

The case eventually made its way to the Iowa Supreme Court. That court ruled that an undocumented worker is within the state’s meaning of an employee and that ”an employment contract with an undocumented worker does not inherently have an illegal purpose, and it is not void as illegal merely because the contract is with an undocumented worker.” The court further held that the Immigration Reform and Control Act, which makes it unlawful for employers to hire undocumented workers, does not preempt Iowa workers’ compensation law.

 

 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:RShafer@ReduceYourWorkersComp.com.
Editor Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: mstack@reduceyourworkerscomp.com.

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php

MODIFIED DUTY CALCULATOR:   http://www.LowerWC.com/transitional-duty-cost-calculator.php

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

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