The Longer You Take To Report A Claim, The More It Will Cost You
The longer you take to report a workers comp claim to your insurer or TPA, the more you run the risk of the claim costing more money. This is due to a myriad of factors, the most important being that the sooner your adjuster gets the claim, the better they can control all aspects of what is going on.
Several online studies have shown a relationship between late reporting and increased claim costs, but it is hard to have a direct correlation. This is because every claim is different, every person is different, every injury has different circumstances, and so on. There is no blanket analysis applicable to just you, the employer.
I do however have a great example. I came across some information from a Carrier where they did an internal study. It appears that they took the claims as they were, by associating reporting lag time with the costs on the file, in order to have something to show clients how reporting can be directly related to costs. This study encompassed thousands of claims, of all types of injuries, but the common thing is that they were all work comp claims. The injuries were broken down by body location, injury type, and by claims that had litigation or not. I do not believe this was a report to be published, so the name of the carrier/TPA will be withheld, as will any other information which may point out to which carrier/TPA performed this study. Of course this study can’t apply to everyone, since this carrier has certain clients, of differing sizes, operating in certain states, etc., but it is one of the best examples I have seen.
Reporting Delay Study Findings:
- Injuries reported within 2 weeks of occurrence are 18% more expensive than those reported within 1 week of occurrence, and injuries reported between the 4thand 5th week following the injury were 45% more expensive.
- The biggest finding involves back injuries, which as a group are 35% more expensive if not reported within the first 7 days post-injury.
- Soft tissue strains and sprains are 13% more expensive if not reported within 7 days of occurrence. For example, carpal tunnel injuries—whose onset are difficult to pinpoint in general—are 11% more expensive if the reporting comes after the first week of reporting.
- 22% of injuries reported within 10 days are litigated, and 47% becomes litigated when the reports arrive more than 31 days following the injury.
The most glaring statistic that I noticed was the litigation. The more time that goes by post injury until the report is called in, the less likely the adjuster will have success in completing their comprehensive investigation into the claim. Without that investigation, they are going to be less and less likely to accept the claim, as they cannot put all the pieces together to make a claim seem compensable. 31 days is more than 4 weeks. Those 4 weeks are the most crucial time in a comp claim. When late reporting occurs, witnesses, the claimant, and the employer all forget key details and elements critical to the claim. Even if the claim was compensable, chances are it will be disputed just based on the elapsed time. Now, the carrier has to absorb legal costs, IME costs, and the ongoing battle of months-long litigation. All of this could have been avoided had the claim been called in promptly.
The other statistics are fairly self-explanatory. The more time goes on, the worse an injury gets. The worse an injury gets, the longer it takes to treat. The longer it takes to treat, the more it is going to cost. Who knows how many surgeries could have been avoided had the claim just been reported within a few days after the injury occurred.
Reporting Delays Will Cost You
Although prompt reporting is only one of a number of management best practices to lowering work comp costs, it is an important one—if not the most important. It is easy to ascertain that well-managed companies are more likely to report an injury promptly versus those employers are that less organized. Keys to organization are the presence of a safety team, injury documenting procedures, and an action plan documenting what steps need to be done after an injury occurs.
The longer you wait to get a workers comp claim called in, the more it is going to cost you and your employee in the long run.
Author 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.
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