One thing seldom heard from the either the insurance company or from the third party claims administrator (TPA) is “we / I made a mistake”. Mistakes happen. The difference between the excellent adjuster and the so-so adjuster is the number of mistakes made. Claims management , supervisors ,and managers also make errors in judgment, or unwittingly commit an oversight. There will not be a list of common claims handling mistakes on the insurance company’s website or TPA’s website. Therefore, we present what are common claims handling errors seen when the claims are audited by an independent claims auditor.
20 Common Adjuster Mistakes
- The failure to thoroughly investigate the claims including the establishment of the nature and extent of the injuries.
- The failureto properly document the average weekly wage and to properly establish the TTD rate.
- The failure to maintain the files on a diary (a regular scheduled file review by the adjuster to ensure all needed activity has been completed).
- The failureto recognize and document subrogation.
- The failureto have Action Plans.
- The failureto read medical reports.
- The failureto monitor and control medical treatment.
- The failureto conclude claims in a timely fashion when the opportunities were presented.
- The failureto know the workers compensation laws in their jurisdiction.
- The failureto file the appropriate state forms with the Industrial Commissions and Workers Compensation Boards.
- The failureto maintain contact and rapport with the claimants.
- The failureto record in the file notes the documentation received on the file.
- The failure to utilize Independent Medical Examinations when appropriate.
- The failureto utilize nurse case managers when appropriate.
- The failureto deny unrelated medical treatment or unrelated body parts when introduced into the claim.
- The failureto attempt to return injured employees to light duty work when the medical providers approved same.
- The failureto respond to important developments on the claims.
- The failure to provide proper litigation management on the litigated claims.
- The failureof management to provide supervision or guidance to the adjusters handling the claims.
- The failureof management to maintain continuity on the claims by changing the assigned adjuster on the claim during the course of the claim. (Occasionally it is necessary on a few files but not on a majority of the claim files).
What To Do About It
When mistakes occur in claims handling, the cost of the claim goes up. The insurance premium paid by employers is impacted by both the frequency and the severity of claims. While frequency of claims carries greater weight in calculating the insurance premium, the severity of the claims – what the claims cost – also impacts the insurance premium.
There are several things employers can do to limit the mistakes made on workers compensation claims, including:
- Having a published set of Best Practices and insisting the claims office abide by them.’
- Having a designated adjuster or dedicated adjuster(s) to handle all your claims.
- Verifying the adjuster has reviewed the Employer’s First Report of Injury and has filed all appropriate forms on every claim.
- Verifying the adjuster has obtained the proper wage/salary information for the calculation of indemnity benefits (calculate the indemnity benefit yourself and compare with what the adjuster is paying weekly or biweekly).
- Providing to the adjuster any information you have or receive about the claim, whether it is medical documentation, the employee’s personnel file or even scuttlebutt heard around the office.
- Establish a regular file review. (What get’s reviewed gets done). If you do not have the time to review the adjuster(s) work yourself, hire an independent claim file auditor to review the files and identify the strong and weak points of the claims handling on your claims.
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Author Michael Stack, Principal, 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 & lead trainer of Amaxx Workers’ Comp Training Center.
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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.