Over the last several years, states have taken a proactive approach to penalizing “frivolous” denials of primary liability in workers’ compensation claims. As a result, claims management teams need to take heed and evaluate their best practices.
What Is Required Before I Deny?
The proper legal requirements to deny primary liability in a workers’ compensation claim vary in each jurisdiction. If you are a part of a claim management team that handles claims in multiple states, it is essential to understand the differing requirements. Proper timing and the completion of specific forms may also be part of the process.
General Rules for Issuing a Denial
There are several general rules one should follow and incorporate in their best practices.
• Understand what forms you require, the timelines they need to be completed in and what parties are required to receive these documents. It is also important to make sure paperwork is submitted to the appropriate state agency.
• Every form and document completed should contain only accurate information. This information typically includes the name of the employee, SSNs, injury related information and other pertinent information on how the injury occurred.
• Denials of primary liability usually require a specific legal reason as to why the injury is being denied. A common form of claim penalties occur when a claims professional states things like, “The injury did not take place. Denied.”
• Stating the specific reason for the denial in language easily readable and understandable to a person of average intelligence and education and a clear statement of the facts forming the basis for the denial are also a standard legal requirement.
• Most states require that insurance carriers and TPAs also provide instructions to injured workers on what steps they can take if they disagree with the denial, as well as the availability of rehabilitation benefits, the statute of limitations for filing a workers’ compensation claim, and the address and telephone numbers of the state division responsible for administering workers’ compensation enforcement.
Never disclose Protected Health Information (PHI) unless you receive written permission to do so or are required to do so under law.
Mistakes Happen. Deal With it Without Delay!
Nobody is perfect and mistakes to happen from time to time. However, ignoring the mistake and not correcting the error can be costly. In order to avoid penalty situations, there are ways one can go about properly handling these issues:
• Cooperation with the state agency assessing the penalty is important. While you might not be able to avoid completely a penalty, cooperation can mitigate the situation. State agency employees appreciate a timely return of all phone calls and letters.
• Provide complete and detailed responses when being audited by state agencies regarding potential penalty issues. When an initial claim is received, it is important to conduct a complete investigation and keep detailed information on facts that will serve as a basis for the denial. Obtaining specific names of witnesses or locating medical records is essential.
• Remember the required timelines. Note when and how to pay various indemnity and medical benefits. If problems arise such as the receipt of paystubs when paying temporary partial disability benefits, it is important to document your file as to the dates that phone calls are made, to whom those phone calls were made, and any additional follow-up after the telephone call. If problems arise due to the receipt of mail, fax transmissions or email communications, document those problems and continue to follow up. It is also important to make sure someone is checking your mail when you are out of the office. Make sure payments are sent to the correct recipient and address.
• When in doubt – ask someone in your office or an attorney. The various statutes and rules for workers’ compensation laws are a complex framework filled with forms, deadlines, and payment schedules. Additionally, voluminous case law exists on penalty issues.
All members of the claim management team need to take proactive steps to avoid penalties. While mistakes do happen, taking responsibility for the error and cooperating can help reduce exposure to you and your clients.
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: firstname.lastname@example.org.
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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.