Claim Management Archives - Work Comp Roundup

Responsibilities of a Workers’ Comp Claims Investigation Leader

April 16, 2019 by Michael B. Stack

Central to successful leadership is attention to detail, solid work ethic and commitment.

Members of the claim management team and fully-engaged employers must exhibit these same traits when it comes to workers’ compensation claims. All claims must be investigated promptly – by the book with no corners cut. This process also includes the development of best practices to manage risk and control workers’ compensation program costs.

Responsibilities of a Claims Leader

There are several goals a good leader must undertake when developing a program. This is something that can be done inside an insurance carrier or company. Items to consider should include:

Develop a program to sniff out fraud. This program includes being proactive to prevent it from taking place and detecting it early on to mitigate program costs;

Update upper management within the organization on issues concerning the overall workers’ compensation program. This position should be able to effectuate and promote change;

Understand how to conduct an effective investigation. This is especially important in more complex claims or those which involved special or unique circumstances; and

Coordinate all efforts between defense counsel and the clients. This should include all interested stakeholders to promote an effective program.

Special Investigation Unit: Dealing with the Tough Claims

Not all workers’ compensation claims are the same. Some claims are more difficult than others. This can include instances where the employee sustains a severe injury, the circumstances surrounding the claim are suspect, but difficult to prove it did not occur or fraud. Proactive claim management teams and employers can address these barriers by developing a “special investigation unit.”

Teamwork is key when working on special claims. It all starts with a dedicated leader who knows how to peel back the layers and get to the bottom of things. Important characteristics of this leader should include:

Someone with law enforcement or military background. These are people who faced difficult challenges in the past and are resourceful;

A person who has a reputation for being fair and honest. Remember, all injured employees need to be treated with dignity and respect. Integrity is paramount;

Knowledge of the law and other applicable tools to complete the goal. An attorney can be considered for this role, but not necessarily required; and

A leader who can effectuate change within an organization.

Leading from the Front – Taking the Lead

The leader of a special investigations unit needs a strong supporting crew. This can include assistance from the following departments:

Human Resources: This area brings an understanding of other applicable rules and regulations together to assist in claim investigation and help an organization avoid countless pitfalls;

Legal Department: An attorney can advise the unit on legal issues and provide advisory opinions, guidance and assist in the development of a legal strategy;

Medical: Having an on-call nurse or doctor who can assist in complex issues such as utilization review of medication or other procedures will drive down costs. They can also assist in injury response; and

Management: It is important to include a representative from senior management. This person can help clarify the mission of an organization and desired results.

Conclusions

Workers’ compensation claims present challenges that call for special measures. To be successful, proactive employers and insurance carriers can develop special units to tackle these matters head-on. This includes engagement from a variety of areas within an organization to resolve claims and reduce workers’ compensation 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: mstack@reduceyourworkerscomp.com.

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

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

Filed Under: Fight Workers Comp Fraud & Abuse

Why Work Comp Claims Become Old Dog Claims

April 11, 2019 by Michael B. Stack

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.

Contact: mstack@reduceyourworkerscomp.com.

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

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

Filed Under: Claim Management

10 Steps Every Adjuster Should Perform In a Workers Comp Claim Investigation

April 4, 2019 by Rebecca Shafer, J.D.

When you go online and read your adjuster’s file notes about your claims, do you know what to look for to be sure the adjuster is performing a quality claim’s investigation on your claim files? If not, read on and learn what the adjuster should be doing to be sure you are being protected from unnecessary workers compensation cost.

ONE:

The first thing the adjuster should do in the claim investigation is to verify coverage. Before the adjuster accepts the claim, the adjuster should check to be sure there is coverage. The verification of coverage should be the first adjuster’s note in the claim file notes.

This would include:

The policy number.
The policy dates to verify the policy is in enforce for the date of the accident.
The state(s) covered under the given policy number and policy period.
Any endorsements to the policy that would change the coverage.
Any exclusions to the policy that would change the coverage (for example – a particular location of the employer is excluded from the coverage).

TWO:

Once the adjuster has confirmed there is coverage, the next step in the investigation is to begin the contacts. With workers compensation, the first contact attempt should not be the employee; it should be the employer. The reason for this is the employee will only provide information the employee considers beneficial to himself. The employer will often provide information that will assist the adjuster in the direction of the claim. The employer might advise that no one saw the accident and the claim is highly questionable, or the employer might advise that seven fellow employees saw the injury occur.

THREE:

The initial contact with the employer should be the same day the accident is reported, or at least within 24 hours of the report of the claim. The adjuster’s file notes should reflect more than “called the employer.” The contact details that should be included in the file notes include:

The facts of the accident.
The identification of any witnesses.
A discussion of any subrogation issues.
Any knowledge the employer has of a prior claim.
Verification of the information on the Employer’s First Report of Injury.
The disability status of the employee.
A description of the employee’s job duties.
The length of time the employee has worked for the employer.
Confirmation of lost time if the injury was reported after the initial waiting period for indemnity benefits.
The availability of modified duty for the employee.
If applicable, a request by the adjuster to the employer to provide the necessary documentation of the employee’s wage history.

FOUR:

The initial contact with the employee should immediately follow the initial contact with the employer. The employee contact should also be the same day the accident is reported, or at least within 24 hours of the report of the claim. The file notes should reflect the initial contact with the employee covered:

The facts of the accident.
The identification of any witnesses.
A discussion of any subrogation issues.
Any prior injury claims of the employee (both workers comp and any other injury claims).
Verification of the information on the Employer’s First Report of Injury.
Any additional information not on the Employer’s First Report of Injury that would be needed to file the ISO index on the employee.
The disability status of the employee including information on the nature of the injury, the treatment and the prognosis.
The employee’s attitude toward the employer and returning to work.
A summary of the explanation of benefits and the future course of action the adjuster will take.

FIVE:

The investigation should also include the contact of any witnesses. The initial contact with the witness(es) should be the same day the accident is reported, or at least within 24 hours of the report of the claim. The file notes on the contact with the witnesses should reflect the facts of the accident as told by the witness(es). All witnesses should be asked to identify any other witnesses.

SIX:

The first contacts part of the investigation should also include contact with the office of the medical provider. This allows the adjuster to verify the nature and scope of the injury, the diagnosis, and the prognosis, plus the adjuster can make arrangements for all medical bill and medical reports to be sent to the adjuster. This information on this part of the adjuster’s investigation should also be reflected in the file notes.

SEVEN:

If the adjuster has any reason to question the compensability of the claim, or if there is the potential for subrogation, or if the employee’s injuries are severe, the adjuster as a part of the, should obtain a recorded statement from the employee during the initial contact. The file notes should reflect a summary of this part of the investigation.

EIGHT:

The claim investigation encompasses much more than just the initial contacts with the employer, employee, medical provider, and any witnesses. The work comp claim investigation should also include:

A medical authorization in those states that require one for workers comp.
Obtaining the current medical records.
Obtaining past medical records if the employee has a history of prior injury claims.
A wage statement for the calculation of indemnity benefits.
The filing of the ISO index.
A police report, OSHA report of any other governmental record related to the injury.
A recorded statement from the employee’s supervisor if there is a compensability question.
Engineering report or other documentation to support subrogation when applicable.
Information on any responsible third parties when subrogation is possible.
Any other information that will have an impact on the outcome of the claim.

NINE:

If the only file notes on the investigation read something like “called employer, no questions about the claim,” the adjuster is not doing a proper investigation. Even if the injury was witnessed by a dozen co-workers, the adjuster who is doing a proper investigation would still cover all the key points noted above. Even in the most valid of claims, the adjuster should still learn the employee’s diagnosis and prognosis, and when the employee will be back on the job. If the adjuster is not asking when the employee can return to work full duty or on modified duty, the claim investigation is incomplete.

TEN:

All the information obtained during the claim investigation should be summarized in the file notes for your review. If the adjuster is not doing so, ask that the file notes are properly documented. After all, with workers compensation, you will eventually pay the cost of the employee’s claim through your insurance premiums. You should know if you are getting the proper claim investigation that you are paying for.

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:.

Contact: RShafer@ReduceYourWorkersComp.com.

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

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

Filed Under: Fight Workers Comp Fraud & Abuse

Intervention Claims In Workers’ Compensation

April 3, 2019 by Michael B. Stack

Intervention claims play an important role in workers’ compensation claims and come from many different sources. These include various government interests (e.g., Medicare, Medicaid, Veterans Administration) and private sources such as health insurance providers and carriers, disability benefit carriers, and attorneys. The list is endless.

To control workers’ compensation costs, it is important that members of the claim management team and attorneys identify these interests promptly and resolve them either via a hearing on the merits or settlement. Failure to do so can add time and expense on a claim.

Policy Reasons for Resolve Intervenors

Many states allow interested parties and potential intervenors to have a role in the workers’ compensation process. The policy behind this is to promote the judicial economy and promote efficiency. A classic example of this could be a workers’ compensation claim that involves multiple medical providers, intervenors and government agencies that pay benefits in conjunction with a work injury. Instead of having many hearings and conferences, the matters are consolidated into one process. It also provides for certainty and consistency in the result.

Placing Potential Intervenors on Notice

Establishing a best practice is important in the identification and handling of intervention claims. It should be the responsibility of all parties to the claim to coordinate and place these interested parties on notice. Failure to do so can lead to a potential intervenor not being aware of a matter and result in a delay.

The process for giving notice to a potential intervenor is usually defined by statute, rule or case law. This usually includes:

Providing notice via written communication mailed to the potential intervenor and including all pertinent documents and pleadings;

Information concerning the potential intervenor’s rights and responsibilities; and

Required steps to formally intervene and become a party.

This process also includes the ability of the defense interests to dispute the claims made by a potential intervenor. Even if a potential intervenor is added to the case, the new party still carries the burden of proof, which can possibly include the burden of establishing the injured employee suffered a compensable work injury.

Pitfalls in Adding Potential Intervenors

All interested parties should avoid the following pitfalls when notifying potential intervenors of their rights.

Notifying potential intervenors too early: Best intentions sometimes result in mistakes. This includes notifying a potential intervenor before treatment actually occurs or treatment can be processed. When placing a part on notice, make sure enough time has elapsed so they will be able to identify the claim(s).

Notifying potential intervenors too late: Most jurisdictions allow for a 30 to 45-day time period for a party to search the pertinent billing records, identify associated treatment and make the correct filings with the court. There needs to be enough time for the potential intervenor to accomplish these tasks.

Overcoming Other Barriers

Cooperation is key when it comes to placing all potential intervenors on notice. This is something all interested parties and their attorneys should accomplish constructively. Common barriers that go beyond parties not working together can include:

HIPAA regulations: Federal and state privacy laws place limits on the disclosure of medical information. While HIPPA does specifically exclude state workers’ compensation matters, the overly cautious and uninformed can create a delay.

Internal Privacy Policies: A medical provider may have additional safeguards in place, which is permitted in certain instances under HIPAA. This can include the requirement a specific release authorization be used before the disclosure and release of an injured employee’s medical records.

Debt collection rules/regulations: The federal government and states have a myriad of debt collection guidelines that need to be taken into consideration. Under the Fair Debt Collection Practices Act, a collection agency is limited in their ability to communicate with an injured employee and other parties.

Conclusions

The identification, notice, and resolution of intervention claims in an essential part of many workers’ compensation claims. It is important that all interested stakeholders understand the rules of the road and guidelines that cover these matters. Failure to do so can result in additional litigation and unnecessary expenses.

Contact: mstack@reduceyourworkerscomp.com.

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

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

Filed Under: Claim Management

Course and Scope of Employment: Questions of Compensability

April 2, 2019 by Michael B. Stack

Issues of compensability are factually driven and require attention to detail by members of the claim management team. This is extremely important in cases where the claim comes down to whether the injury was in the “course and scope of” employment. The correct decision can only be made when the individual claim handler has a good understanding of the law and knows how to apply it to the facts.

Case Study: The Workplace Fall

Frank Rizzo is a day laborer for Acme Construction Company and dresses for success by wearing his steel-toed work boots and favorite blue jeans. Given his hard work, he is invited to a corporate meeting and was told to “dress like a boring c-Suite professional.” Frank is excited and goes out and purchases a $1,000 suit and wing-tipped dress shoes. While the shoes make his feet uncomfortable, he attends the meeting. The meeting was exciting, and he is looking forward to prime rib for lunch. While walking down a hallway to the banquet room, his right knee buckles and now needs a total knee replacement.

Personal injuries “arising out of and in the course and scope of” employment is generally compensable under workers’ compensation laws. Frank was on the clock at the time of the meeting, but the question remains as to whether the “course and scope of” element has been satisfied. The hallway Frank was walking on did not have any slippery surfaces and was free of imperfections.

Is the injury compensable? These are questions claim handlers must answer daily.

Questions of “Risk” and “Position”

Courts across the country answer questions of “course and scope of” on a regular basis. The result is a maze of tests interested stakeholders must confront to evaluate a claim and whether to accept it:

Increased Risk Test: Under this test, courts will examine whether the employment creates a “special hazard” that gives rise to the work injury. If this is the case, there is a necessary causal relationship between employment and work injury. Common examples of this include instances where something is located in the workplace that increases the risk of injury. Idiopathic injuries (those that are unknown or without explanation) are typically found not to be compensable and are denied.

Positional Risk Test: This test examines whether the employer placed the employee in a location or “position” that gave rise to the work injury. Under this rather low threshold, just being at work and sustaining an injury can give rise to a claim being compensable.

Applying the Standards – Differing Results

The application of these two tests would likely give rise to different results in the scenarios outlined above.

Increased Risk: The injury likely would not be compensable. Although the employee was asked to wear clothing and footwear he normally did not wear, nothing in the workplace exposed Frank to a heightened risk of injury. The defect-free surface would be an important factor. There is also no explanation as to why his knee gave out.

Positional Risk: Frank was required to be at the meeting. It is also important to note he was specifically asked to dress in a certain manner, and testimony at hearing that his new shoes were uncomfortable are important. Although the walking surface was defect-free, his presence in the workplace gave rise to the injury. A court applying this test would find it compensable.

Based on the divergent results, members of the claim management team should understand the importance of how to evaluate the risk.

Investigating Troublesome “Course and Scope of” Claims

Members of the claim management team need to peel back the layers when investigating matters like Frank’s claims. This should include the following areas:

Knowledge of the applicable legal standard – “positional” or “increased” risk;

Obtain a detailed statement from the employee and possible witnesses. Is there an explanation for why or how the injury occurred? This is key;

Determine the type of surface involved in the injury and its condition at the time the incident occurred. Documentary evidence such as photographs and security video should be preserved; and

Instructions on workplace attire such as footwear, etc.

Conclusions

Claim handlers are called upon to make daily decisions on whether to accept a claim and commence the payment of workers’ compensation benefits. Not making the correct decisions can lead to increased costs on claims. This includes money spent on litigation costs, sanctions/penalties and setting incorrect reserves.

Contact: mstack@reduceyourworkerscomp.com.

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

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

Filed Under: Causation and Compensability

Clear and Responsive Employer Contacts in Account Instructions

March 18, 2019 by Michael B. Stack

If you fail to plan, you plan to fail. That quote was originally stated by Benjamin Franklin.

Account Handling Instructions Are Planning & Communication Tool

Hello, my name is Michael Stack, I’m the CEO of Amaxx. That concept of planning comes to light in the world of worker’s compensation in the form of your account handling instructions, your account services instructions, client instructions, et cetera. Various different TPAs and carriers have different names to mean the same thing, which is this tool, this communication tool between the employer and the claims handling organization, whether that’s your TPA or carrier. It’s a highly effective way to get on the same page for how you’re going to approach your worker’s compensation claims, how you’re going to handle them. What are those set of instructions for what to do as far as a communication tool, and then on the back side, an accountability tool.

You say, “Well, this is what we’re supposed to do,” and did we do it or not? And then you can come together with that and adjust as needed, tweak as needed, if the plan isn’t going as planned.

A number of things that I want you to address, and we cover this really in full detail in our course called How to Script Winning Account Handling Instructions, you can see the link to register for that below. One of these pieces that I want you to really focus on and highlight, because I feel like it gets missed the most, we’ve come up with all these things about settlements, settlement authority, and how to use medical vendors, and all this different stuff, and look at what term it is we want to use, et cetera, et cetera, et cetera in our planning. But the key piece that is so critical is this chain of command or communication or reliable contacts for the adjuster at the employer site.

Clear and Responsive Employer Contacts

For the adjuster at the employer site, who are those reliable, clear contacts that know their contacts and know that they need to get the adjuster information when the adjuster needs it? Because if you come up with this great plan, it’s like, “Okay, adjuster, I want you to do X, Y, and Z, and I want you to do all this stuff, and I want you to do this report, I want you to give me this data on X number of days, and I want you to get it all right all the time. Oh, but by the way, when you have a problem, you have a question, or you need to ask the employer something, we may or may not get back to you. I know Jane is your contact, but Jane’s on vacation. So you’re going to have to wait in order to get that information,” and that just doesn’t work.

So a number of things that I want you to do when you come up with this clear and concise list of reliable contacts for the adjuster at the employer site. Number one is, what is the chain of command. What is the chain of command at the employer site? So how does that adjuster kind of get to understand what’s going on at the company? Who’s going to send in, or who needs to receive, that notice of injury whenever an injury occurs? What are the injury details? How do they find out what happened? When the adjuster is going through their three-point contact, who are they calling? And who is that number, are they going to be reliable, are they going to be there to answer that phone?

Who Is The Back-Up Employer Contact?

Number four, who do they call to get the wage history? Who do they call to get the wage history? And then last piece here, there’s a number more, but these are just a couple of highlights. Who’s in charge of the light-duty program, who do they contact for light duty? And then, just in that example that I just gave, if Jane’s the contact and Jane’s on vacation, who’s the back-up? Who’s that back-up person that they’re going to contact?

So for every piece within your account instructions, who is the contact at the employer that’s going to be reliable and that’s going to get that adjuster the information they need to do their job appropriately? If you have that information, then it’s going to run just that much smoother.

Again, my name is Michael Stack, I’m the CEO of Amaxx. Remember, your work today in worker’s compensation can have a dramatic impact on your company’s bottom line, but it will have a dramatic impact on someone’s life. So, be great.

Michael Stack - Amaxx 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/

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

Filed Under: Claim Management

10 Helpful Tips For Managing Angry Workers’ Comp Claimants

March 14, 2019 by Michael B. Stack

Unfortunately, angry workers’ comp claimants are often part of the workers’ compensation business. As hard as you try, you are never going to please all people all of the time. Experienced professionals know how to properly diffuse a tense situation. But it is an asset that is learned over time.

Here are a few important tips to remember:

1. Stay Calm

Regardless of the negative attitudes or unpleasant tones an angry caller may have, it is essential that you do not get emotional as well. Using phrases such as “I hear what you are saying” or “I understand” can help to calm angry callers. Remember they usually have no idea what is going on or why these decisions are being made on their claims, so take the time to let them vent a bit then calmly explain to them the situation.

2. Listen & Be Patient

Do not attempt to interrupt angry callers. Be patient and let them finish speaking. Sometimes they just need to vent their frustrations. After that, they will relax a bit and work with you to resolve their issue. Explain to them what is going on, and what options they may have for moving forward.

3. Remain Professional

Above all remain professional. Remember you are in the customer service industry, and there is a lot of competition out there. Every phone call should be dealt with in a professional matter, no matter the conversation.

4. Do Not Raise Your Voice

Raising your voice or talking in a sarcastic tone is only going to irritate your angry workers’ comp claimant further, which will resolve nothing. If anything, you can get in trouble with your supervisor. Many carriers record telephone conversations, and if this discussion gets pulled for review you are going to look foolish.

5. Try Not to Argue

Your main goal in diffusing a heated conversation is to resolve the problem. But a direct argument will rarely resolve anything. Instead, explain to them what is going on, and what they can do to help themselves. It may be that getting medical records or a more detailed report from their doctor is the piece of evidence you need to complete your investigation. Remember the claimant does not have the experience that you do in handling claims day in and day out, so cut them some slack and try to help them instead of just arguing point/counterpoint.

6. Speak Slowly and Clearly

Nobody likes to have to repeat themselves, so speak in a clear voice. Also, try to avoid talking in legal terms or in claim shorthand. The angry workers’ comp claimant will probably have no idea what you are talking about, which will frustrate them. Pretend you are explaining the issue to someone who has zero experience in this situation, and you may end up with better results than you planned.

7. Empathize & Apologize

How would you feel if you are in the same situation? What would you want to be said to you to make you feel better about the call? Angry workers’ comp claimants want to know that you understand where they are coming from, and they want the reassurance that you can help them with whatever issue they may have. Even if you know the caller is wrong, take a moment and apologize for the confusion. Many callers simply want acknowledgment from the carrier that a mistake may have been made, if applicable to your scenario. An apology is the first step to overcoming their anger and opening a dialogue about resolving the issue.

8. Offer Solutions

People are coming to you with questions about their claim, or why a decision was made. But oftentimes these decisions are not written in stone. Denied claims can be accepted later, and vice versa. Maybe your claimant can file for mediation on their denied claim. Or maybe they did not submit enough information in the beginning for their claim to be accepted. Whatever the reason may be, explain to them what options they have for moving to the next level. If you cannot answer a question immediately, let them know that you will work on it and get back to them with some answers or options and go from there.

9. End the Call if the Person is Repeatedly Abusive

Your goal is to bring a successful closure to each phone call. However, you do not have to tolerate abuse. Kindly interject with an “Excuse me” if necessary and inform the caller that their language or behavior is not acceptable, and it will not help them resolve their conflict. It is well within your ability to end the call if the person continues to be belligerent and abusive if you have asked them to calm down several times beforehand.

10. Do Not Take It Personally

In the end, this is your job. A lot of claims adjusters have a lot of hours of work invested into each file, and sometimes they can wear their heart on their sleeves. But at the end of the day, you have to accept the decisions you made on a claim. I recall a young adjuster I knew that was first starting out in work comp, and he used to agonize over his decision about whether a claim was compensable or not, and if he was making the right call. This is a good asset to have, but only if it is a healthy concern. The process that is in place with supervisor reviews and audits is there to catch your errors, if you have any, and to help you make confident decisions on claim outcomes. Trust in the process in place, and believe in your decisions that you make. Sometimes you have to go with your gut decision.

Summary

An adjuster is on the phone for the majority of their day, every day. And in the field of claims, conflict will arise. There is often no way to avoid dealing with an angry workers’ comp claimant. But you have to be armed with the proper way to handle yourself on the phone–not just for certain calls but for every call. Implement the tips above, and hopefully, you will be known around the office as a person that can diffuse any tough situation that is thrown their way. Knowing how to work the phone is one of the best assets an adjuster can have.

Contact: mstack@reduceyourworkerscomp.com.

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

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

Filed Under: Claim Management

The Dangers of Under-Reserving

March 13, 2019 by Rebecca Shafer, J.D.

Under-reserving in workers’ compensation is a dangerous practice.

A basic principle of business solvency is to have an asset to offset each liability. A workers’ compensation claim is a legal obligation – a liability for the company, whether it is a contractually assumed liability through an insurance policy for an insurance company, or a retained liability through self-insurance. A claim reserve is an estimate of what the workers’ compensation claim will cost. When the adjuster handling the work comp claim establishes a reserve on the claim file, it is a definite amount of dollars that are being set aside to pay the future cost of the work comp claim.

Under-Funded Liability Will Eventually Experience Shortfall

From an accounting standpoint, a claim is an incurred liability, even though it will be paid in the future. When the reserve is established by the adjuster, the company loses the ability to use the amount of money that has been set aside to pay the work comp claim. Inaccurate reserving, whether the reserves are excessive or inadequate, distorts the company’s financial condition. When the reserves are too high, money the company could use in other aspects of the business is no longer available for use by the company. When the reserves are too low, the company has an underfunded liability. This creates a situation where the company will eventually experience a shortfall.

While both over-reserving and under-reserving present an inaccurate picture of the company’s financial health, most financial people will argue that under-reserving is worse for the company. The reason for this is simple – the self-insured employer or the insurance company must have adequate reserves to meet their obligations. If the reserves are inadequate, the self-insured employer or the insurance company runs the risk of insolvency.

When the self-insured employer or insurance company has understated their reserves, they have overstated their assets and have understated their liabilities. The difference between the amount of assets an insurance company has and the amount of liabilities an insurance company has is referred to as the insurance company’s surplus. An insurance company’s ability to pay claims is evaluated by measuring its surplus in comparison to their outstanding obligations.

Evaluated By Ability To Pay Claims

Insurance rating firms like A.M. Best measure the financial stability of an insurance company by evaluating their ability to pay their claims. If the insurance company has understated their reserves, they may temporarily increase their financial stability rating, but when the claims come due (are paid) and the available surplus drops, the financial stability rating of the company will be downgraded. A downgrade in an insurance company’s financial stability rating results in fewer potential buyers of their insurance products because doing business with the downgraded insurance company is considered riskier.

An example of how under-reserving of work comp claims can impact the surplus is as follows (to simplify, the insurer has no other liabilities except claims).

Total assets Total Claim Reserves Total surplus

$10,000,000 $8,000,000 (under reserved) $2,000,000

$10,000,000 $9,500,000 (properly reserved) $500,000

In this example, when the reserves are understated, it appears the insurance company has a surplus of 20% of assets, but in actuality, the surplus is only 5% of assets.

Reserving Practices Subject to Audits

All jurisdictions regulate the financial stability of self-insured employers and insurance companies. The reserving practices of the self-insured employers and insurance companies are subject to periodical audits by the state insurance department or other state regulatory agencies. When the self-insurer or the insurance company is audited, if the reserves are inadequate to pay all open claims (and technically, all claims that have been incurred but not yet reported), the state insurance department will require the self-insured employer or insurance company to increase the reserves to cover their obligations on their claims. If the self-insured employer or insurance company does not have the assets available to place in reserve for those claims, the state insurance department will shut the company down.

Another aspect of under-reserving is the impact on the calculation of future premiums. The reserves on the open claims are a part of the calculations in establishing the loss experience of the company. If the loss experience is understated because the reserves are understated, the insurance company will be charging inadequate premiums, resulting in lower profits for the company, or even pushing the company quicker to insolvency.

Proper Reserving Is Essential

To accurately reflect the self-insured employer’s financial position or the insurers financial position, proper reserving for the claims is essential. Under-reserving impacts the financial stability of the company, as the shortfall in reserving will eventually be corrected by taking the shortfall from the company’s surplus. If you have any doubts about the adequacy of the reserves on your workers’ compensation claims, please contact us as we can recommend claim auditors that will verify the adequacy of your claim file reserves.

Contact: RShafer@ReduceYourWorkersComp.com.

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

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

Filed Under: Claim Management

Six Things that Drive Workers Compensation Adjusters Crazy

March 12, 2019 by Rebecca Shafer, J.D.

Being a workers’ compensation adjuster has a lot of demands. Every day you have to juggle multiple demands on many files, sometimes within several jurisdictions. A typical caseload for the lost-time adjuster is 150 active files. The adjuster tries to handle the demands of those files in addition to the phone calls, emails, and medical records, usually without any support staff.

Every workers’ compensation adjuster appreciates anything that helps make their job easier. Below we discuss six small items that can make a big difference to Joe (or Josephine) Claims Adjuster.

1. Please complete all fields on the injury form.

When an workers’ compensation adjuster first gets a new assignment, nothing makes them more frustrated than to see many fields missing information. This can include social security numbers, birth dates, the type of injury, the date the injury was reported to the supervisor, etc. All of these fields are equally important, and when any are empty it means another phone call to the contact at the insured to gather this information. Take the time to complete all fields, so the adjuster has the information needed to get started on the file investigation without delay.

NOTE TO EMPLOYERS: IF YOU LEAVE BLANK FIELDS, SOMEONE ELSE MAY FILL THEM IN – WITH ANSWERS THAT YOU WON’T LIKE. Attach information if there isn’t enough room for the complete answer. Staple it and mail a copy to the adjuster.

2. Report All Claims in a Timely Manner.

The next thing that annoys workers’ compensation adjusters are late claims. Depending on the jurisdiction, this can put the adjuster in a time crunch to gather as much claims information to complete the investigation, and the fact they are rushing can lead to errors, or even worse, leakage. The last thing anyone wants is money and time wasted on a claim that is not compensable. One of the best things you can do is to report a claim right away. Do not let it sit on your desk until the injured worker goes in for surgery the next day. The sooner you can get that injury report to your adjuster, the better chance they will have to do a proper, thorough investigation. This leads to correct, ethical decisions on your claims without delays, penalties, or leakage.

3. Let the adjuster know if there is lost time on a claim.

Claims that include lost wages carry a certain priority with the workers’ compensation adjuster, since every day that clicks by means another day of potential wage loss due to the employee. As mentioned above, injuries should be reported right away. This gives the adjuster time to gather medical records to see if the claim is compensable. It also gives the adjuster a chance to get work restrictions on your employee so they can be placed in your light-duty work program. This eliminates the need for lost wages paid to the employee and keeps your claim costs down. When injuries are reported right away, everyone wins. The employee gets prompt contact by the adjuster, the adjuster gets a jump on the claim, and the employer gets to keep their costs down as low as possible.

4. Don’t tell the adjuster if a claim is compensable or not. It bugs them.

As much as you think a claim is legit or not, the employer typically cannot make a decision on a claim’s compensability. This is the adjuster’s job — what they get paid to do. This is why they are licensed to be claims adjusters in your state. They have the training and certification to make the decision on compensability. It is really important to voice your opinion on the claim, and to be able to back up your assumptions with facts. This will greatly help the adjuster with their investigation, but the overall decision on if the claim is accepted or not should be left up to the adjuster. Plus some jurisdictions have steep fines if claims are denied in error, so why put yourself in that position? Leave it up to the claims professionals.

IF IT IS NOT A LEGITIMATE CLAIM – TELL THEM YOU SUSPECT FRAUD. PUSH IT- so you are taken seriously. I don’t always live by my own advise here, and I almost always give my opinion about what I think is compensable, or not…

5. Make yourself accessible to the adjuster and return calls as soon as possible.

Workers’ Compensation adjusters have to make many phone calls every day. They are constantly on the phone. If they are calling you to get facts on an injury, and they leave you a message to call them, please call them back as soon as you can. Employer input on claims is important. Bear in mind you see your employees every day. You know a lot about them that the claim adjusters do not. Your investigation is just as important to the adjuster as is theirs. They rely on you heavily to know about the injury, what happened, why it happened, and what happened after the worker left. Send them any medical information you have, as this also will give them the provider’s name, address, contact info, and initial diagnosis. If you get bills for the treatment from the provider send them to the adjuster so they can be processed for payment if the claim is compensable. Anything you get that involves the claim should be sent to the adjuster, no matter what it is. The adjuster would always rather have more information than not enough.

6. Know the details of the injury soon after it happened.

The first question the workers’ compensation adjuster will ask you when they call is, “What happened?” Adjusters hate to hear the answer, “I do not know.” Obviously, this does not help the adjuster. You should be heavily involved in any claim that occurs at your workplace, whether it is a work comp injury, a liability injury, or a property damage claim. Gather facts and witness statements to send to the adjuster. Comments the witnesses have can impact a claim because the adjuster will compare that to the history given to them by the injured worker, and what history the injured worker gave the doctor when they were first examined in a medical facility. Any facts that do not add up will raise the red flag that there may be something more to this claim than what is on the surface, and it could prevent a claim from being falsely accepted. This again will keep your costs down, since you will not incur the leakage associated with paying a claim in error.

Conclusion

In conclusion, these are 6 items that can greatly help the workers’ compensation adjuster, even though you as the employer may find them quite trivial. You would be surprised if you saw the amount of information adjusters have to process on their 150-200 claims each day. Every little bit of information to the adjuster helps them out and makes their job easier. It all leads to the same goal that we have in claims, which is to properly investigate every one so the appropriate decision can be made on the compensability.

Contact: RShafer@ReduceYourWorkersComp.com.

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

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

Filed Under: Claims Adjuster & Employer Relationship

Over-Reserving and Your Bottom Line

March 7, 2019 by Rebecca Shafer, J.D.

Over-reserving of workers’ compensation claims can have a major financial impact.

To pay the cost of workers compensation claims, the insurer or the self-insured employer sets aside the amount of money the company anticipates as necessary to cover the cost of the claim. The process of placing money in a reserve – reserving – sounds simple, but it’s not. While most financial obligations of a company have a set price, workers comp claims do not come with a predetermined cost. The amount of money needed to pay the claim is an estimate based on the experience of the adjuster with previous similar injury claims. Even though the reserve is an estimate, it is a legal obligation and appears on the insurer’s balance sheet.

Under-Reserving & Over-Reserving Creates Issues

If the workers’ comp adjuster for the insurer underestimates the amount of money necessary to pay the claim, the claim is under-reserved. If the adjuster overestimates the amount of money needed for the claim, the claim is over-reserved. Both under-reserving and over reserving creates issues for the insurer.

When a claim file is over-reserved, the extra money placed in the insurance reserve to pay the claim is not available to the insurer for any other purpose. The growth of the business is reduced because the insurer has less money available for its financial operations – investing, supplies, salaries, etc. While the impact of one claim being over reserved may not be felt, the impact of many claims being over reserved significantly curtails the growth of the insurance company and can even strangle the potential of the insurance company by reducing the funds it has available for its business.

Over-Reserving Causes Side-Effects

Over-reserving also causes a serious side effect for the workers’ comp insurer because of the way the premiums are calculated. The two components of workers comp claims affecting insurance premiums are frequency and severity. Workers comp claims are often referred to as “long-tail” claims because they often remain open for years. Therefore, when the underwriter at the insurance company computes the insurance premium, both the closed claims – where the reserves reflect what was actually paid – and the open claims, are used to calculate the future premium.

When the claim files are over-reserved, the severity of the claims is overstated in the calculation of the insurance premiums. This has a detrimental impact on the cost of workers comp insurance. The extra money in the over reserved open claims results in the premium calculation being higher than it should be. The employer is penalized for over reserves by having to pay higher insurance premiums than should be charged. If the employer can obtain the same workers’ compensation insurance at another company, at a lower price, the insurer loses the employer’s business. If the over reserving is severe enough, it can cause the financial collapse of the workers’ comp insurer because the insurer is unable to sell any new business as the insurance premiums it charges employers are too high.

Adjuster May Over-Reserve Out of Caution

The workers comp adjuster may over reserve the claim out of an abundance of caution, or more often, because it is easier to put a high reserve on the file than it is to spend the necessary time evaluating the medical information, the extent of the impairment/disability, and the applicable workers comp statutes to determine the correct reserve amount. As claims management understands the impact of over-reserving, when they see a pattern of over-reserving, the usual conclusion is the adjuster is either inexperienced or incompetent. The insurer or self-insured employer needs to work with the adjuster who is over reserving to improve the adjuster’s reserving skills. When over reserving is corrected, the excess money being held in reserves is released and goes straight to the bottom line of the insurer’s financial report.

The financial security and well-being of the insurer or the self-insured employer is dependent upon the adequacy of the workers’ comp claim reserved. If the reserved is overstated, it will diminish the monetary funds the company has available for its other financial obligations and opportunities. It will also cause the necessary premiums to be overstated, resulting in a loss of business for the insurer.

If you are a self-insured employer and believe your workers’ comp claim reserves are set too high, please contact us and we will be glad to set you up with an independent claims auditor to verify the accuracy of your claim file reserves.

Contact: RShafer@ReduceYourWorkersComp.com.

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

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

Filed Under: Claim Management

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The Dangers of Under-Reserving

Six Things that Drive Workers Compensation Adjusters Crazy

Over-Reserving and Your Bottom Line

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