Members of the workers’ compensation claims management team are faced with many challenges. One of these tests includes the resolution of liens, intervention claims and other interests as part of settling a claim. Failure to consider and resolve these interests can be detrimental to effective claims settlement and negatively impact a program’s bottom line.
What is a Lien? Why is it Important?
According to Black’s, a lien is “The principle under which an insurer (or another party) has paid the loss under an indemnity policy is entitled to take on all the rights and remedies belonging to the insured against a third party concerning any injuries or breaches covered by the policy.” Under this legal principle, members of the claims management team need to proactively identify, provide notice to and resolve interested third-parties for medical care and treatment (or other benefits) related to a workers’ compensation claim. Failure to take these important steps can result in the insurance carrier or insured being subjected to fine, penalty or future repayment.
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Some of the most common liens in a workers’ compensation claim include those asserted by medical providers or health insurance carriers. These liens typically arise in the following situations:
- Denial of primary liability;
- Assertion of an affirmative defense after liability is accepted. Common situations include defenses related to the reasonableness or necessity of medical care, or treatment parameters issues; and
- Payments mistakenly made by a health insurance carrier for treatment not properly submitted to the workers’ compensation carrier for payment.
Providing Notice to Interested Third Parties
In many jurisdictions, the parties to a workers’ compensation claim are responsible for including these interested parties in the claim, including taking the following steps:
- Putting the medical provider or health insurance carrier on notice of their rights under the state workers’ compensation law;
- Including the interested party on all pleadings served and filed during litigation; and
- Making good faith efforts to resolve the intervention claims if the matter resolves before a hearing on the merits.
State laws that require notice of intervention rights typically include provisions where a party can extinguish recovery rights of non-responsive third party.
Adopting Best Practices to Lien Resolution
Members of the claims management team need to be proactive and scrutinize claims made by medical providers and health insurance carriers. Part of the process includes affirmative defenses one can assert related to these claims. It is important to be mindful of such issues as notice, statute of limitations, prohibited acts defense and employee intoxication to name a few. Additional areas to consider include:
- Recovery by the interested third party only in instances where the employee receives a settlement, judgment or award;
- Requiring the third party to prove the medical bills are related to the workers’ compensation claim. This proof must include a close review of all bills and claims to ensure it is related to the work injury; and
- Requesting a copy of an applicable health insurance policy. In some instances, the policies ability to recover may be limited by Plan language. In some instances, a group health plan may be self-funded by the employer. In these cases, the Plan may be willing to waive its entire claim.
In cases where there is a settlement, members of the claims management team should seek a settlement with the third party based on a reduced amount. Arguments need to be made that include the strengths of defenses available to the employer/insurer and weaknesses of the employee’s claim.
Conclusions
Members of the workers’ compensation claims management team need to be proactive when it comes to the settlement of liens and intervention claims. It is important to remain proactive on these matters and understand the recovery rights of all parties. It is also important to treat all parties fairly and with respect. Taking these steps can effectuate settlement and reduce program costs.
Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is a 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.
Contact: [email protected].
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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.
