There is Only One Reason to Close a Workers Comp Claim

The Only Reason to Close a Worker’s Compensation Claim

A workers’ compensation claim should only be closed when all known activity on the file has been completed. If it is possible that another dollar can be spent on the claim, the file should not be closed.

Seven Reasons Not to Close a Work Comp Claim

If there is still activity on the file, it should not be closed. A claim should be left open in all of these situations:

1. The employee has not completed all medical treatment
2. All temporary total disability indemnity has been paid, but the employee is continuing treatment with a medical provider
3. The employee has completed medical treatment, but all medical bills have not yet been paid
4. The employee has temporary total disability benefits that have not been paid
5. The employee has completed all medical treatment and all medical bills have been paid but the employee is still receiving payments for permanent partial or total disability
6. The widow(er) is still receiving benefits
7. All medical bills and indemnity benefits have been paid, but there are still outstanding bills for the defense attorney, nurse case manager, or another service provider

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A Claims Manager’s Performance Should Not Be Evaluated by Numbers of Closed Cases

Best practices of the Third Party Administrator require that claims managers’ performance review criteria should not include the number of closed cases. This leads to too high of an incentive to artificially close cases that should not be closed.

Examples of Improper Claims Closings

Claims Manager Evaluated on Number of Closed Files

One claims manager had several old files where employees had permanent medical problems and had occasional doctor visits. The claims manager had closed the files but was still making annual payments. During a claim file audit, the claims manager argued that the claims should be closed because all the indemnity benefits were paid, although there was on-going medical maintenance treatment. In this situation the manager’s performance was evaluated based on the number of files closed.

TPA Gets in Trouble with Large Fortune 500 Client

In the following example, a large national third party administrator (TPA) got into trouble when a big client noticed major irregularities in the number of claim files that were closed and re-opened.

The client’s risk manager found that the TPA had a salary bonus program for adjusters. One of the performance criteria was to close as many old claims each month as new claims received.

The adjusters found a way to get around the intent of the performance measurement so their numbers looked good. At the end of the month, adjusters who had not closed enough old claims closed files in the computer system that had little current activity. The following week in the new month, the adjusters re-opened the claim files. Obviously, this improper handling of file closings was not in the realm of best practices.

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