Self-insured employers often get into trouble for not being knowledgeable of the requirements of the Unfair Claims Practice Act in the state(s) where it is being self-administered for workers’ compensation claims. The failure to act in a totally ethical manner can lead to litigation by the party wronged and to fines and/or the suspension of the self-insured’s authorization to be self-insured by the State.
The workers’ compensation adjuster, who is often dealing with attorneys out to maximize the cost of the workers’ comp claim, or with employee claimants who are attempting to commit fraud, may be tempted to fight fire with fire. The adjuster should always handle the claim in a totally ethical manner. If an adjuster is doing any of the following, stop everything and discuss the adjuster’s actions with the adjuster.
22 Unfair Claim Practices By the Adjuster
- Knowingly misrepresenting the benefits available under the state’s workers compensation law
- Failing to contact the injured employee (hoping the employee will not pursue the claim)
- Failing to investigate the claim properly
- Denying compensability without a valid reason
- Failing to file all necessary state forms
- Recording the employee’s statement when the employee is under the influence of medications or distracted by pain
- Failing to provide a copy of a recorded statement or written statement when one is requested
- Recording telephone calls without the other party’s knowledge of the call being recorded
- Knowingly documenting the file notes with inaccurate information
- Intentionally not returning phone calls of the employee or medical provider in an effort to discourage the claim
- Failing to pay indemnity benefits timely trying to coerce the employee into returning to work prematurely
- Failing to authorize needed diagnostic testing without reason to not authorize
- Failing to pay for permanent partial disability
- Paying less than the workers’ comp statute calls for when settling a permanent partial disability
- Offering to settle and close out future benefits for an amount significantly less than what the adjuster knows to be fair
- Advising the employee not to hire an attorney
- Threatening to reduce the settlement of the claim if the employee hires an attorney
- Discussing any aspect of the claim with an employee known to be represented by an attorney
- Settling the claim before the extent of disability is known
- Overstating the damages and exposures so that the adjuster’s supervisor will extend excessive settlement authority, allowing the adjuster to make a quick (but overpaid) settlement
- Providing the employee’s personal information to parties who do not have a legitimate need to know
- Having a financial interest in any vendor utilized on the claim
Intention of Adjuster Matters
Mistakes, oversights, and poor claim handling are not unfair claims practices. The workers’ compensation adjuster often has more work to do than it is possible to get done. With the telephone ringing constantly, the e-mail flooding in, having numerous deadlines for filing forms, numerous deadlines to prepare for mediations or conferences, and numerous other items that need to be completed, it is normal for some things to fall through the cracks. When the adjuster does not contact the injured employee timely or does not respond to a settlement demand from the employee’s attorney, it is normally because the adjuster has more to do than is possible to get done. It only becomes an unfair claims practice when the adjuster intentionally decides not to take needed action in an effort to impact the overall outcome of the claim.
Almost all adjusters are honest and have the best interest of both the employee and the employer at heart. If you do notice any of the above 22 issues occurring, stop and discuss the issue with the adjuster. Often there is an ethical and valid reason for the adjuster’s action which will become apparent when you learn more about the reason for the adjuster‘s actions. Only when the adjuster sets out to act dishonestly should you be greatly concerned.
Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the co-author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:.
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.