Every now and then when I meet people and tell them about my past work as a claims adjuster, I sometimes get a blank stare in return. The question that usually follows is “What the heck is that?”
True, before I got into the claims world years ago, I had no idea what a claims adjuster was. When I took my first job in claims, the job description sounded interesting. I had a background in Economics, and knew that insurance costs were a typical part of the financial structure of a business along with many associated costs. But that was about my total knowledge of that industry. I had no idea what a claims adjuster was, or what I would be doing day in and day out. It sounded like being a detective of sorts, and I figured I would be investigating fraud and people faking injuries to try and get a big fat settlement.
After my 3 week training course, and many years on the job experience, I discovered it was a lot more than just investigating potential fraud. There was the investigation part of a claim, the medical part, and the litigation part of the claim. But how do the adjusters handle claims? Is there a common blueprint that all claims use? And if so, are there any variations? Let us discuss the life of a simple workers comp claim.
1. The claim arrives at the desk of the adjuster.
When an adjuster receives a new claim, it is fairly common practice that the adjuster has 24 hours to make the 3 initial contacts: the recorded statement of the claimant, the statement from the employer about what happened, and a call to the medical clinic to obtain the medical records and to talk to the doctor (if needed). After these contacts are made, an initial decision can be made on the claim on compensability or not. The employer holds a large key here, as the employer has the eyes and ears about the claim’s potential issues regarding the causal relation and the overall compensability. Also important are the medical records, since they also will hold a large part of the background of the injury, and they will also shed some light on if this is an acute, objective injury or something that is more subjective and a little harder to relate back to the alleged work incident.
2. A compensability decision is made on the claim
At this point, after the contacts are made and the medical records are obtained, the adjuster will make a decision on the initial outcome of the claim. If this was a fall that resulted in a leg fracture, this will more than likely be a compensable injury. Unless you uncover some major degree of horseplay or a very direct violation of a stated safety protocol, that type of fracture claim is probably legitimate.
More subjective strain-like injuries, however, are often more difficult to prove. People come into work carrying baggage from outside of work activities, and those claims can take longer for a causal relation to be established. The worker will say that it is related to daily work duties. The employer may add some other details, such as the employee is known to be moving to a new house over the weekend, or helping a friend roof a house for example. When this type of gossipy evidence is introduced, the adjuster will take a step back and probably file for an extension to be able to complete an investigation before making a decision on the overall compensability of the claim. Background checks, witness statements, and an IME may be needed at this point to try and determine what, if anything, is work related.
2(a) Let us say the employer has nothing too bizarre to add. The injury is reported promptly and the injured worker goes right to the clinic. The injury is witnessed, and nothing out of the ordinary occurred. For the most part, the claim will be deemed compensable and the worker will be paid wage loss if applicable, until returning to work or released from medical care without restriction.
2(b) Now let us say the employer did add that they know of some other inside,or outside-of-work circumstances that could have contributed to the injury. The employee may be upset over a recent performance review, and shortly after filed a claim for an injury. The injury is not witnessed, and the employee was doing something that they do not normally do as part of the job. The story of the injury has now changed depending on who else the employer talked to on the jobsite, and nobody seems to be able to confirm what exactly happened or why. At this point, the adjuster will place a dispute on the file, and point out to the employee that there are some inconsistencies in the investigation of the claim, and a decision cannot be made on whether the claim is indeed work related or not. The burden of proof falls on the employee; it is their burden to prove how and why the injury occurred during the course and scope of employment. It is not the adjuster’s job.
3. The Claimant files for a legal hearing or obtains legal counsel
So now a dispute is placed on the file, and the employee is not very happy. The employee visits an attorney, and the attorney feels that there is a solid case to start with filing for a mediation or a hearing. When the adjuster receives notice of the legal counsel retainer, a call is placed to the claimant’s attorney. Plaintiff counsels will vary wildly in how workers comp claims are handled. Some are very involved, and proactive, and some are not. The adjuster will explain why the case is being disputed, and report there is not enough clear evidence to show that this worker was 100% injured in the course and scope of employment. If an IME is performed, and in the favor of the carrier, the adjuster will forward a copy to the attorney for review. The attorney may file for the deposition of that IME doctor, to try and poke holes in that doctor’s medical opinion. But typically, cases that go into dispute attempt to be settled before any major litigation goes forward. The timeline on when a settlement can be made can take many weeks or months, even years, and during this time the claimant will continue to get medical treatment and accrue wage loss, which increases the overall value of their claim. A settlement will consist of a compromise of the medical and wage expenses, and usually will include the full and final resolution of the claim of all issues past, present, and future. Again the time span on a resolution can take many months, if not a year or two depending on the extent of the injury. The settlement generally cannot occur until the worker reaches the healing plateau, or are fully released from medical care with no further medical disability. If the workers comp judge agrees to the guidelines of the settlement, an Order is signed. Then the adjuster cuts the checks to the necessary parties, and the claim is resolved
Between when the claim is called in, and when the claim is resolved, it can take many more turns other than what is outlined here. For the sake of brevity, we keep it nice and somewhat neat. However any claim can spiral out of control at any time, prompting the need for surveillance, vocational evaluations, job placements, several IME appointments, witness statements, and much more. The point we are trying to make here is that it is easy to say that all claims follow this road, whether accepted or not. Claims adjusters wear many hats, and workers comp claims can be very complex. Severe injuries can occur at any time, and know that the more complex the injury, the more complex the claim can be. Even if a claim seems to be legit on the surface, there are many factors the adjuster has to look at before a claim can be accepted as compensable.
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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