In general, the more risk a company has retained, the more control the insurer will relinquish. In a high deductible program (e.g. $500,000) most companies can negotiate for a high level of control comparable to if they were self-insured. Two account instructions to negotiate that are important to the defense of your claims are the right to choose legal counsel and select investigators.
The company needs to negotiate for the right to select legal counsel in any case where the exposure is within the company’s retention level.
Often, in-house counsel wishes to use the company’s previous lawyers on similar claims but cannot do so unless the independent, outside lawyer is on the carrier’s “approved” list.
Right to “Select” vs. Right To “Suggest” Legal Counsel
The right to “select” counsel is different from the right to “suggest” or to “be consulted on” the selection of counsel because it allows the company to use an attorney of its choice. Although carriers have strict criteria for attorneys on the “authorized, approved list of attorneys,” the insured may have business reasons, other than purely objective criteria, for desiring to use an attorney, not on the list.
Bear in mind that sometimes, the local attorneys who defend the insured are employed by “captive” law firms on the insurer’s payroll who will defend only the narrow “insured” issue. For example, a company may desire a broader defense for a workers’ compensation claim wherein the defense attorney considers employment, labor, and injury management issues rather than just the narrow issue of whether the injury was work-related.
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Retain Right To Request And Select Investigators
The insured should retain the right to request and select investigators and have the right to specify the type of investigation needed. There is a significant difference between an “activities check” and a “sub-rosa investigation.” An activities check is limited to making inquiries and usually does not include in-depth, undercover video surveillance of the claimant’s abilities.
The company aggressively controlling workers’ compensation claims may want to right to select the investigator of its choice because it had previous success with a local investigator or a certain firm it uses nationwide. Your account service instructions should specify copies of all investigative reports and be forwarded to the insured.
Most insurance companies are prepared to accommodate these requests in a high-risk retention policy, but many employers simply do not know what to request or how to convey expectations. An important element of employers taking control of workers’ compensation costs is taking control of their account service instructions.
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 the founder & lead trainer of Amaxx Workers’ Comp Training Center, which offers the Certified Master of Workers’ Compensation national designation.
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