Every self-insured employer who has been managing their own workers’ compensation claims program for 3 years or more have “old dog” claims, or for the politically correct folks, legacy claims. These claims include the injured employees who take longer than normal to reach the level of maximum medical improvement (MMI), the injured employees who have reached MMI but need on-going medical maintenance medical care, and the employees who are permanently totally disabled.
Claims Can Stay Open For Many Reasons
If you ask the third party administrator (TPA) adjuster why any particular claim is still open, the adjuster will recite the employee’s medical condition and possibly the industrial commission ruling on the particular claim. While the medical condition and/or the industrial commission ruling are factors in why the claim is still open, there are often many other factors and reasons that the adjuster does not recite (and frequently does not recognize). Some of the reasons that a work comp claim becomes an old dog claim include:
- Inadequate initial investigation into the nature and extent of the injury
- Inadequate claims training of the work comp adjusters
- Inadequate medical management throughout the claim
- A change of adjusters during the life of the claim resulting in a loss of continuity in the claim handling
- The original adjuster, prior adjuster(s) and/or the current adjuster have had inadequate training on how to deal with complicated claims
- The adjuster handling the claim has too many other claims assigned, causing the adjuster to miss opportunities when they occur to settle the claim
- The TPA puts too much focus on closing claims, so the adjusters give priority to the smaller, easier to resolve claims
- Other priorities keeps the adjuster from focusing on the legacy old dog claim
- The TPA does not have a ‘home office examiner’ reviewing and providing guidance to the adjuster on the large or older claims
- The claim is still being handled by a prior TPA who no longer values your business as the prior TPA is not receiving any new assignments
Legacy “Old Dog” Claims Can Be a Financial Burden
When legacy (old dog) claims drag on, they become a financial burden to the self-insured employer. As time goes by, the claims become a bigger and bigger drain on the financial resources of the company. If nothing is done to resolve the claim, it becomes a permanent drain on the company.
To move these claims forward, while mitigating the ultimate claim cost, an in-depth review (file quality audit) of each claim is needed. While the audit can be done internally, most self-insured employers do not have the resources needed to do the audit. Plus, a fresh set of eyes reviewing the claim will often pick up points previously missed. An outside, highly-experienced, independent claims auditor can review each legacy file and craft a detailed action plan with completion dates for each specific file.
Independent Claim File Audit Can Uncover Solutions
The independent auditor’s detailed action plan for each file should provide:
- A review of the reserves to determine the adequacy of the current reserves and make reserve change recommendations to the ultimate value where appropriate
- If the employee is not currently working, a recommended return to work process, whether it is with your company, or vocational training to work somewhere else
- An analysis of the current medical situation and what future medical steps are necessary
- A review of the litigation plan if the case is currently being litigated or appears headed into litigation
- Confirmation or recommendations on compliance with state filing requirements
- Recommendations on whether or not to attempt an all-inclusive settlement of the claim
- Recommendations on whether or not to use a structured settlement of the claim
- Recommendations on possible financial offsets (subrogation, social security disability, state disability, second injury fund or subsequent injury fund, recovery from the excess carrier, etc.)
While the independent, experienced claims auditor cannot undo the damage already done due to prior claim handling mistakes, the independent audit can assist you in mitigating future financial damage from the legacy old dog claims.
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 .
Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/
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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.