One of the biggest threats to an employer’s workers compensation cost is often not one bad claim, but an escalated cost an multiple claims.
With that in mind, there are several ways whereby an employer can reduce the chances for leakage and continuously higher claim costs.
11 Red Flags Of Escalated Claim Cost
At the time a workers compensation adjuster gets their hands on different forms of indemnity claims, they will first place an indemnity reserve on the claim.
In instances where workers comp adjusters discover challenges in coming up with the correct reserves deals with the potential problems claims that are dealt with at the on-set of the claim as just another typical claim.
Various versions of workers’ comp claims that can potentially lead to much higher financial outcomes than first thought are:
- Employees with a prior history detailing neck or back injuries;
- Claims that deal with back surgery (fusion, laminectomy, etc.) on a person who is involved in manual labor;
- Employees who begin things with a hostile attitude toward the employer or the insurer;
- Each and any claim with a long time period between the date of the injury and the date the claim is first noted to the business owner;
- An employee who is not satisfied with the medical treatment being received and switches doctors more than once. (This is oftentimes done by the worker who is seeking a physician that won’t question the employee’s subjective complaints).
- Changing doctors, this after obtaining an attorney, and going with a doctor known in the local insurance field and medical community to be “pro-surgery” or “pro-claimant” by many people;
- Any claim where the employee becomes tied to pills;
- The employee is closing in on retirement age;
- The employer announces an impending work-force reduction, or the employee has just suffered a layoff from work (work comp indemnity checks are typically found to be much higher than unemployment checks);
- The employee applies for social security disability (in some cases, this happens prior to the adjuster receiving the medical reports from the treating doctor);
- The workers comp check is higher per week than the employee’s prior take home pay (this ties to when home compensation is reduced by union dues, 401K contributions, state income taxes, etc).
Responsibilities of the Adjuster
It is the adjuster’s responsibility to look for and handle oversight on these issues when they become known to him or her.
If the adjuster does not respond to these types of matters when they first come to the forefront, the claims will fall apart, and it will cost a whole lot more than it should. The risk manager for the employer should step up and take action when the inexperienced adjuster does not see or confront the impending problem.
Any time the adjuster, the adjuster’s supervisor or the risk manager witness a potential problem coming to the forefront, they should act immediately. It is much easier to halt a new problem claim from developing into a bad claim than it is stop a bad claim that is well-established.
Always Remember Value of Investigating
Always keep in mind that many major problems can and could have been lessened or even prevented by initiating an investigation.
If something seems suspicious, there is always the chance that it is for a reason. Just like in other circumstances, one who thinks or knows for sure they are being investigated is less likely to move forward with illegal behavior. And if they do continue, your investigation could very well trip them up into making a mistake.
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Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder of COMPClub, an exclusive member training program on workers compensation cost containment best practices.
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