Note: The following article was written by an experienced claim handler who wishes to remain anonymous. This will point out a disturbing issue in the world of insurance, where the employer is not being honest about injury.

Step into My World – The Life of a Claim Handler

Over the years, I have investigated workers’ compensation losses and have heard bizarre stories of personal injury and the circumstances surrounding accidents.  If someone asks me if I have seen everything in workers’ compensation, I have to answer an emphatic “NO!”  Chances are a bigger and more unbelievable instance has yet to cross my desk, and it will be my job as the claim handler to determine what happened. For those employers without the luxury of video surveillance, I go by witness accounts and attempt to piece the circumstances of the injury.

What do you know about the injury details?

Every employer has a designated person to report claims.  The first phone call I make after getting the claim is to this person. Today, we will call her Sally. I call Sally and ask her if this is all that is known about the injury.  She says, “yes,” and that all details are included in the injury report.

That may be correct, but I know the report is missing information.  I rephrase the question about the exact timeline of events:

• Who was injured?

• Did the worker tell someone?

• Did the worker go to the clinic alone or did someone drive?

• Do you know about any prior injuries to the claimant’s knee?

If you the employer, do not know the particulars about the injury, then be clear on that at the outset.

Just the Facts Ma’am

I can name countless times where an employer reports to me there are no witnesses to an injury. Then I interview the injured employee who provides several names as witnesses.  I then talk to those individuals and ask about their account of events, and more times than not they witnessed the incident or arrived shortly thereafter.

Perhaps the employer did not ask about witnesses at the time of reporting and was not aware of any. Maybe the internal injury questionnaire does not have the space to write witness names.  In some cases, the employer may intend for the claim to sound less substantial.

The Clock is Ticking – Failing to Make a Timely Injury Report

I sometimes get a claim with an injury date of a month earlier, or even a year.  Maybe this is an error, but if someone approaches you as an employer and reports being hurt, a claim should be filed immediately.  Do not wait and see if they are actually injured.

The employer needs to call it in because I will question the injured employee about dates.   Maybe the report was completed on the injury date and was sent to your agent or broker.  Agents receive a lot of paperwork from their clients.  Just call it in, and if it is sent to your agent, follow up with them.  The sooner the claim reaches the carrier, the better.

The Devil is in the Details

Do you know of any outside activities the claimant is involved in?  I like to ask employers this question to see how much they know about their employees. This kind of tip proves very helpful in a case and investigation.  However, if you as an employer cannot be sure about a tip, then tell us.

Avoiding Spoliation of Evidence – Saving Money through Subrogation

For those employers with moving machinery, admit if the safety guards were off at the time of injury.  The employee is going to tell us either way.  The guard is there to protect workers, so the worker is fully aware if it is missing.  Maybe this leads to a design flaw that our subrogation department can investigate so we can recoup claims dollars spent on this injury.  Modifying safety guards can lead to very serious injury, and the costs associated with that loss are far more than any profit you can attain by changing the functionality of machinery.

Conducting a Complete and Accurate Investigation

If you have internal reporting or accident investigations, then I commend you.  You are on the way to becoming more proactive at handling losses.  We frequently discuss reporting, trends, and identifying injury areas.  If you are not internally reporting, then that is okay also.

Conclusions

In the world of workplace injuries, a lot of people on the outside think that the carrier must worry only about the injured employee’s honesty, but the integrity of the employer is paramount.  In any case, the truth will prevail.  If all parties are honest in the beginning, it makes handling the claim that much easier for everyone involved.

Amaxx LLC is a workers’ comp educational company focusing on cost containment systems to help employers reduce their workers’ comp costs by 20% to 50%.  Amaxx offers 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 Certified Master of Workers’ Compensation designation through the Amaxx Workers’ Comp Training Center.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

Amaxx WC Training Center: https://workerscomptraining.com

©2019 Amaxx LLC. All rights reserved under International Copyright Law.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Self-insured employers and insurers understand that workers’ comp leakage costs money.  The overpayment of medical cost, indemnity benefits and claim expenses is a waste of money and weakens the overall financial stability of the employer or the insurer.  What to do about workers’ comp leakage is a frequent topic of discussion.

When there is no doubt that a payment should not have been made (example:  a non-recovered duplicate payment), it is referred to as hard leakage.  When a payment is made that is questionable and is subjective (example: a higher than normal settlement), it is referred to as soft leakage.

Employers and insurers frequently attempt to mitigate both hard and soft workers’ comp leakage by providing additional training to the claims staff. Additional training definitely has benefits and will reduce leakage, but additional training normally addresses only the issues the work comp supervisor or claims manager has identified.  This approach will often continue to overlook different types of leakage that is not on the company’s radar.

Independent Claims Auditors Bring Perspective

To identify leakage that is being overlooked, companies have been turning to independent claims auditors who bring in an outside perspective when reviewing claim files.  Senior management often recognizes adjusters, supervisors and even claims managers have a built-in conflict of interest in identifying every source of leakage – the more leakage they identify, the lower their level of competency appears to be.

The independent claims auditor can be completely objective, as the independent claims auditor does not have to worry about the impression the results of a workers’ comp leakage audit will create. The outside auditor is looking for the financial mistakes (leakage) in an effort to assist the insurer or self-insured employer to lower its overall claims costs without the worry that senior management may be critical of the adjuster’s/ supervisor’s/claims manager’s performance.

Hard Workers’ Comp Leakage

The independent claims auditor will identify types of hard workers’ comp leakage including:

• Payment of non-compensable claims
• Payment of claims occurring outside of the insurance policy period
• Failure to utilize the medical bill fee schedule for all medical bills covered by the schedule
• Payment of the same medical bill, including overlapping medical bills, more than once
• Incorrect calculation of the employee’s average weekly wage
• Incorrect calculation of the employee’s indemnity benefit
• Incorrect calculation of the number of days or weeks of indemnity benefits owed
• Incorrect handling of the waiting period and the retroactive period
• Erroneous payment of indemnity benefits after the employee has return to work
• Failure to properly calculate the impairment rating value
• Failure to utilize the pharmacy benefit management program
• Failure to apply offsets including unemployment benefits, social security benefits, over governmental programs
• Failure to identify and pursue subrogation
• Failure to obtain Second Injury Fund recoveries
• Failure to obtain reinsurance company recoveries
• Failure to arrange for modified duty work when approved by the medical provider
• Payment of temporary total disability benefits when temporary partial disability benefits are owed
• Overpayment of medical mileage
• Over reserving of the long-term claim resulting in a higher than appropriate experience modification factor with Underwriting

Soft Workers’ Comp Leakage:

The independent claims auditor will identify possible soft workers’ comp leakage including:

• Failure to thoroughly investigate the claim prior to acceptance of compensability
• Failure to complete the Insurance Services Office inquiry
• Failure to properly evaluate future medical benefits when settling a claim
• Poor settlement negotiations
• Failure to properly manage defense counsel
• Failure to properly utilize medical case management, either overutilization or underutilization
• Failure to utilize medical triage
• Failure to settle dispute claims at the optimum cost point

Controlling Workers’ Comp Leakage Can Mean Large Savings

Controlling leakage is frequently the difference between an insurer or self-insured employer making or losing money.  While no claims operation will eliminate all leakage, a five percent (5%) leakage factor on a small self-insured program with $20 million in paid claims each year is an extra $1 million dollars spent, and 3% leakage on a $100 million a year paid out by an insurer is an extra $3 million dollars spent.

The above lists of how leakage occurs in workers’ compensation are not complete.  There are various other ways leakage can occur.  For a workers’ comp leakage audit to provide the maximum benefit to the insurer or self-insured employer, an auditor with a high level of expertise in workers’ compensation is needed.

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: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

©2019 Amaxx LLC. All rights reserved under International Copyright Law.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.