Adjusters are faced daily with the task of making many different decisions on many different types of claims. Every claim is in the different stages it is easy to lose track of some of them.
Mistakes can come in a variety of different scenarios, and below we discuss four common oversights that the adjuster can make.
Wage calculation errors
Many adjusters handle claims in more than one state at a time. Each state has its own way of calculating wage loss (See our State by State guide for information on your jurisdiction), and some are more intricate than others. Because of this, it is common for an adjuster to make an underpayment or overpayment due to these differing wage calculations.
The most common mistake within this realm is a waiting period calculation error. Almost every state gives the employer and carrier a chance to get the injured worker back to light duty work before having to pay full wage loss benefits. Using Michigan as an example, there is a two-tiered system: the first 7 seven days are the actual waiting period where no wage loss benefits are paid. This gives the employer time to obtain medical restrictions and to find a replacement job. The worker has to accrue this time as being totally out of work.
On the 8th day the benefits for wage loss begin. If the claimant is still out of work after 14 days, then he also picks up the first 7 days of missed wages.
In Wisconsin there is a 3 day waiting period (See Wisconsin law) and pay benefits start on the 4th day,. If the claimant is still out of work after 7 days, the first 3 are picked up and paid.
Each state has its own way of calculating wage loss, and it is easy for an adjuster to confuse the waiting period duration. Some states also have other little sidebars, saying that if light duty work is offered and refused, then of course no wage loss will be paid. But how was the job offered to the employee? Was a certified letter mailed and received by the employee? When was it mailed? Did a supervisor just leave a voicemail for the injured worker to come in to work? As you can see, there are a lot of variables within the wage loss genre. The best advice is if there are questions about whether wage loss should be paid, consult local legal counsel.
Failing to file State forms timely, resulting in a penalty fine
The filing of state forms is similar to the wage loss waiting period. Some states have a very strict time period which an adjuster must file forms indicating that benefits have or have not been paid. If the adjuster fails to do so, the carrier may receive a nominal fine that must be paid to the State. Some States have no fines at all in this regard.
Even more severe is the failure of the carrier to report a claim to Medicare when the worker is receiving workers compensation medical and wage benefits. At the time of this article, the fine is $1,000/per claimant, per day. Obviously because of the amount and penalty, carriers are very vigilant about making sure to get the required information on the claim to Medicare, but a lot of times this is the duty of the adjuster. The employer is not really affected by this measure, but it is a very important thing to be cognoscente to ensure all parties are aware than an injured worker is a Medicare recipient as well.
Failing to follow up with a treating doctor or IME doctor
Since the adjuster has several irons in the fire at once, it is very common to forget to follow up with the doctor. Failure to get the IME report needed can result in an overpayment of workers comp wage loss pay. If the IME was 5/1/12, and the report is not gotten until 6/1/12; the worker can easily be overpaid if the IME terminated benefits due to the worker no longer being injured (since the benefits should not be received at all). Some states require the employer to pay wage loss until the IME report is received, and some only require payment until the actual IME appointment date. Be sure to know what the payment requirements because failure to do so may result in a fine against the carrier and/or bonus wage loss pay to the injured employee.
Failure to pay wage loss benefits timely upon completion of the investigation
Most states give the carrier and adjuster time to investigate if a claim will be compensable. If the adjuster needs more time, most states require that a form be filed for an extension to the investigation. Failure for the adjuster to file that form can result in a fine. This is usually payable to the injured worker in the way of extra wage loss benefits to compensate the worker for the time without pay, especially if the claim is deemed compensable. Many states vary wildly in this regard, so consult local counsel on questions regarding investigation timeframes and when the best time is to file for an extension.
These 4 topics discussed above only scratch the surface on potential errors an adjuster can make during the life of a claim. Just because someone is an adjuster does not mean that they are necessarily a great one. Being an adjuster means juggling many things at once, and meeting the employer’s best interests when dealing with the claims of injured workers.
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, Director of Operations, 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 or agent about workers comp issues.
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