You Need to Handle Workers Comp Claims This Way

While every workers compensation claim is unique, every claim contains certain key events and documents. The Best Practices established by either the insurer or the third party administrator will create a certain amount of uniformity in the claims.

When reviewing workers comp claims of employees there needs to be an established criteria in the handling of the claims. Each claim will contain information on: [WCx]

Coverage

Contacts

Investigation

File Documents

Evaluation and Settlement

Coverage

The very first step the adjuster will take in the handling of the claim is verifying there is coverage. This includes checking the policy number to be sure it is accurate; the policy dates to be sure the injury occurred during the time frame covered; the state(s) covered by the policy; and, any endorsements to the policy or exclusions of coverage. If any aspect of the coverage verification is missing, the adjuster should stop any further activity on the file until there is proof the insurance covers the claim.

Contacts

Once the workers comp adjuster has verified there is insurance coverage in effect for the name insured, on the date of the injury, and in a location covered by the policy, the adjuster will contact all the involved parties. Whether the adjuster contacts the injured employee or employer first will depend on the nature and extent of the injury, as well as time frame of the known events. The adjuster will also contact the medical provider’s office to obtain the initial medical treatment information, provide information to the medical provider on billing for their services, and provide the medical provider with information on the return to work policy of the employer. Any other parties that may impact the claim will also be contacted. For example, witnesses on questionable or severe claims.

Investigation

Contact with all parties involved is the start of the claim investigation, but the proper investigation will contain many other actions that will impact the future outcome of the claim. Some of the investigation steps include:

A comparison of the details of the accident as provided by the employer, the employee, the medical provider, and any witnesses. Any deviation in the information obtained from the various parties will need to be analyzed by the adjuster.

The filing of the Insurance Service Office inquiry to determine if the employee has made prior insurance claims, and if so, do they impact the present workers’ comp claim. For instance – the employee who strained his lower back in your claim, also had a lower back injury work comp claim with a previous employer.

A determination if there is a third-party responsible for the employee’s injury, and if so, the documentation needed to pursue a subrogation claim.

An analysis of the nature and extent of the employee’s injury, the medical treatment plan and the prognosis for the employee’s recovery.

An analysis of the employee’s job duties, equipment used, the return to work restrictions from the medical provider, and the modified duty information obtained from the employer to determine if a modified duty job is an option.

A determination as to the future course of activity needed on the file, also known as an Action Plan.

File Documents

Every claim file will have basic claim documents to support the claim and the activity. Depending on the extent of the injury, the file may have additional documentation that might not be found in a simple injury claim. The documents you may see in the claim file include:

The Employer’s First Report of Injury

The recorded statement summary of the employee and possibly the recorded statement summary of the employee’s supervisor and/or witnesses.

The required state forms filed with the governmental office enforcing the workers’ compensation statutes of the state.

The wage statement showing the employee’s earnings during the required calculation period.

The Insurance Service Office report.

The medical records.

Vocational and/or rehabilitation reports.

Subrogation documentation.

Correspondence to and from defense counsel, correspondence to and from the employee’s attorney, and correspondence between defense counsel and the employee’s attorney.

Reserve worksheets used to calculate the cost of the claim.

File notes (a log of activities undertaken) making a record of every telephone call, piece of mail, e-mail, fax or other communication on the claim.

Evaluation and Settlement

When the claim file has progressed to the point where the adjuster can start the evaluation process (usually when the employee has reached maximum medical improvement); there will be either a reserve worksheet or an evaluation worksheet establishing the financial exposure of the claim. The evaluation of the claim will include the compensability, the disability rating, the jurisdictional law and any legal questions that need to be resolved. The file notes should describe the adjuster’s settlement discussions when they have taken place. [WCx]

An essential part of risk management is to know as much as possible about the exposures your company faces. We recommend that you obtain electronic access (on a read-only basis) to the insurer’s or third party administrator’s claim file. By knowing what is in your claim file, you will able to contribute any additional information that will benefit the adjuster in bringing your employee’s workers comp claim to a conclusion.

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: mstack@reduceyourworkerscomp.com.

WORKERS COMP MANAGEMENT MANUAL: www.WCManual.com

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.