The RED FLAGS of Workers Comp Fraud

workers compensation red flags of fraudA critical part of controlling workers’ compensation costs is to put into place solid investigation techniques.  No matter how severe or minor a workplace injury, each case needs to be reviewed to identify any fraudulent claims and take appropriate action.

 

When communicating with employees, make it clear that the company will:

 

 

  • Identify corrective measures

 

  • Watch for minor extensions of days out of work and outright fraudulent claims.

 

 

Review these Red Flags of Fraud and request an investigation if you suspect a claim is illegitimate or exaggerated.
 

 

Injured Worker Red Flags:

 

  • Injury reported late, to an attorney or to the state commission before reporting it to the employer.

 

  • Fails to attend weekly meetings.

 

 

  • Is never home when you phone, especially during regular workday hours.

 

  • Has only a postal box rather than a home address.

 

  • Misses doctor appointments.

 

  • Is known to perform seasonal activities, hobbies, or work.

 

  • Has moved out of town or out of state.

 

  • Disputes average weekly wage due to additional income.

 

  • Files for benefits in a state other than the main location.

 

  • Disputes information supplied by the employer on “First Report of Injury” notice.

 

  • Refuses to cooperate in claim investigation.

 

  • Has an unstable work history.

 

  • Has recently been terminated, demoted, or passed over for promotion.

 

  • Has a prior history of injury management or liability claims.

 

  • Makes excessive demands or is pressing for a quick settlement.

 

  • Carries little or no health insurance.

 

 

Medical Flags:

 

  • Medical reports are repetitive, indicating continuing, constant pain with conservative medical treatment

 

  • The word “disproportionate” is used in medical reports

 

  • The doctor mentions there is “facial grimacing”

 

  • Positive “Waddell Tests” (test for low back pain) are mentioned

 

 

Workplace Flags:

 

  • Employer experiencing labor difficulties (i.e., layoffs, strikes, walkouts).

 

  • Tips from fellow workers, friends, or relatives.

 

  • The insurance company wants to settle the claim for a considerable amount of money.

 

 

“Things” just don’t ADD UP! Trust your gut, and if something seems off, be sure to check it out.

 

 

Michael Stack - AmaxxAuthor 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.

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://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.

Defending Permanent Total Disability (PTD) Cases in Work Comp

Permanent total disabilityMembers of the claim management team face many challenges when it comes to dealing with injured employees seeking entitlement to permanent total disability (PTD) benefits.  Exposure for these types of claims is high.  It is important to be proactive on these claims in order to reduce costs in a workers’ compensation program.

 

 

The Aging Workforce and Workers’ Compensation

 

Notwithstanding the recent economic upturn and increasing wages, Americans continue to suffer from the effects of the Great Recession.  Proof of this can be found labor market statistics from the U.S. Department of Labor.  According to a recent survey, the “greying” of the workforce continues:

 

  • In 1994, 11.9% of the U.S. labor marker was 55 years old and older.

 

  • In 2014, this age group comprised 21.7%.

 

  • By 2024, people 55 years old and older will make up 24.8% of the labor market.

 

Older people miss work for longer periods of time compared to their younger counterparts.  On average, someone over the age of 55 will miss up to two weeks following an injury.  Those between the ages 20-24 will only miss four days.

 

 

Permanently and Totally Disabled Defined

 

According to Prof. Arthur Larson, someone is totally disabled when the “claimant has been able to earn occasional wages or perform certain kinds of gainful work does not necessarily rule out a finding of total disability or require that it be reduced to partial. The task is to phrase a rule delimitating the amount and character of work a man can be able to do without forfeiting his total disability status.”

 

Reduced into a general rule, courts in many jurisdictions will review the following factors when determining if someone qualifies for permanent total disability benefits:

 

  • Job Search: Employee’s in most jurisdictions are required to conduct a reasonable and diligent job search.  Examples of what is “reasonable and diligent” includes time spent looking for work, the location where one seeks employment, and the overall effort spent.

 

  • Cooperation with Vocational Rehabilitation Assistance: In many states, employees have access to a Qualified Rehabilitation Consultant (QRC) to assist in job search efforts.  A QRC performs a variety of roles when it comes to assisting an injured employee re-enter the workforce.

 

  • Earning Capacity: This factor takes into consideration the employee’s ability to work and earn a wage comparable to what they were making prior to the injury.  It is important to note an employee working in a limited capacity can be successful in their efforts to obtain permanent total disability benefits.

 

  • Refusal of Suitable Job Offer: The employee’s willingness to accept a job offer often comes down to concerns of whether they are able to perform a job offered by the employer.  When reviewing this factor, it is important to evaluate medical and vocational evidence to determine if the work offered by the employer is similar to what they were performing at the time of injury, and uses their training and experience in a manner that would advance the interests of all parties.

 

 

Other Defenses to Consider in Defending PTD Claims

 

There are other issues to consider when defending PTD claims.

 

  • Withdrawal from Labor Market: Employees seeking workers’ compensation benefits are required to stay active in the labor market until they demonstrate an inability to secure suitable gainful employment.  A withdrawal from the labor market can include a move to another geographic location that has fewer job opportunities, or an area where jobs pay lower wages.  It may be necessary to secure a vocational expert to successfully employ this defense.

 

  • Retirement Defense: Most states allow for the termination of PTD benefits when an employee retires.  This is often not a clear-cut distinction, and requires investigation.  This can include statements made by the employee as to how long they intended to work prior to their injury and application for Social Security retirement benefits, and receiving payments from a pension.

 

 

Conclusions

 

The aging workforce is driving members of the claim management team to be proactive when it comes to claims for permanent total disability (PTD) benefits.  This requires a complete investigation and determination as to the employee’s job search efforts, cooperation with their QRC, earning capacity, and refusal of a job offer.  Failure to take the necessary steps can add costs to a claim and reduce a program’s effectiveness.

 

 

 

Michael Stack - AmaxxAuthor 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.

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://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.

 

Selection Criteria for New Third Party Administrator (TPA)

third party administratorWhether you are just starting your self-insured claims program or have decided it is time for a switch to a new third party administrator (TPA), the selection of the new TPA is one of the most important decisions you can make in the administration of your self-insured program.

 

Employers switching TPAs often ask questions of potential new TPA partners that address the issues they have had with their current TPA. Employers frequently make the mistake of not asking the new potential TPA partner about areas where the current TPA performs well.

 

 

Areas that need to be explored with all potential TPAs before selecting the next TPA include:

 

  • Obtaining a copy of the TPA’s Best Practices to confirm their claim handling standards
  • Obtaining a list of the current clients and former clients to contact for their impression of the TPA’s abilities
  • Verifying the TPA has a claims office in each state where you have business locations
  • In large states, verifying the claims office(s) are located near your business locations
  • Verifying the TPA will assign dedicated adjusters to your account in areas where your claim volume is large enough to occupy all of one or more adjusters, and will assign a designated adjuster to handle all claims in locations where you have inadequate claim volume to keep one adjuster busy
  • Determining the claim reserving authority the adjusters will have
  • Determining the claim settlement authority the adjusters will have
  • Confirming the experience level of each of the dedicated or designated adjusters
  • Determining the frequency of the claim file reviews by the claim supervisors and the extent of the directions and guidance provided by the supervisors
  • Confirming the licensing of each adjuster and each claims office
  • Establishing the claims intake process
  • Establishing the maximum number of claims that will be assigned to each adjuster
  • Establishing who the legal defense firm(s) will be when defense counsel is needed
  • Establishing who the medical triage company will be
  • Establishing who the medical management company will be when medical management is needed
  • Establishing who the pharmacy benefit manager will be
  • Establishing who will provide the medical fee schedule reviews
  • Determining the capabilities of the claims management system used by the TPA
  • Determining whether your claims management system can be integrated with the claims management system of the TPA and who will be responsible for maintaining the systems integration
  • Verifying that the TPAs claim management system will be able to provide all the data and claim management reports needed to manage your claims programs
  • Determining who will be responsible for correction of data errors that occur
  • Determining the security measures the TPA will take to protect the confidentiality of your data and financial information
  • Determining the nature and extent of the financial data available on each claim file
  • Determining if the TPA data system will allow the creation of ad hoc reports
  • Verifying the TPA will allow annual independent claim file audits to verify compliance with Best Practices including the prevention of claim leakage

 

 

This list provides just some of the areas that need to be considered when selecting a new TPA. By addressing these issues during the TPA selection process, further problems with the new TPA can be reduced, if not eliminated.

 

 

 

Michael Stack - AmaxxAuthor 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: http://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.

Tips to Get the Most from Your Workers’ Comp Adjuster

 

Hey there, Michael Stack here with Amaxx. So Happy Mother’s Day to all the mothers that are out there. Hopefully you had a lovely celebration over this past weekend celebrating Mother’s Day. We certainly did for my wife, the mother of my four children. We did coffee and pancakes in bed and taken out to a really nice lunch. We had a really lovely day, and hopefully it was the same for you or your mother as well.

 

But it got me thinking about this sort of this day of demonstration of gratitude for mothers and how really for the amount of work that they do, one day is just not enough. It pales in comparison to demonstrating that gratitude. It needs to be delivered on a regular basis.

 

 

Gratitude for Your Workers’ Comp Adjuster

 

And it got me thinking about this other group, sort of this other role within the work comp industry that’s the same way that doesn’t get even a day at all, and that’s your adjusters. For the amount of work that your adjusters do on a day in, day out basis, the importance of their role within the work comp industry, the amount of gratitude that they get is very, very low. There are no pancakes delivered to them in bed, there’s no taking them out to lunch to have a lovely day.

 

So two things I want to talk about and focus on getting the most out of these adjuster relationships in today’s video. First one is demonstrating gratitude. How to demonstrate gratitude and the second thing is about how to set these up. How to set up these adjuster relationships.

 

So very simple, when I talk about gratitude you’re asking your adjuster for a thousand different things every day. Send me this form, send me this recorded statement, I need this, I need this, did you do the investigation, did you the three-point contact, what was this, blah, blah, blah, and it’s coming out in rapid fire all day long via phone, email and now often times text messages. So all these different places that they’re getting demands to respond to regularly.

 

 

Say Please & Thank You

 

Say please, say thank you to your adjuster. May I please have that investigation report? Can you please send me that witness statement? Whatever it is that you’re asking your adjuster, and when they send it to you, say thank you. Say thank you. This is a lost art within our world today. Don’t just apply this to adjusters, apply it to your regular daily life.

 

We have gotten to be so bold in the way that we interact with people that this has been forgotten. Very simple, very necessary, and it’s going to demonstrate a little bit more of that gratitude for your adjusters. And oh, by the way, maybe take them to lunch every once in a while too. They always like that.

 

Second thing is I want to talk about your set up within your account handling instructions. So when you set this up when you’re with your TPA when you’re with your carrier, if you’ve been with them for a long time it’s worth revisiting definitely at least on an annual basis. But a lot of time we like to talk about your account instructions as a living document, something that you can alter or change as necessary throughout the course of your claims handling relationship.

 

 

Set-Up In Workers’ Comp Account Handling Instructions

 

So let’s talk about the set up. Couple of things that I want you to look for in your account instructions when you’re initially setting it up or if you’ve been with them for a while to potentially modify.

 

 

Dedicated vs Designated Adjuster

 

So you can have a dedicated versus a designated adjuster. Now this is about how to set this up as far as who is serving you and what it costs. So who is serving you and what it costs. So dedicated versus designated, I want you to look at their case loads and I want you to look at their experience.

 

So what type of adjuster, who is that individual who is going to be assigned to your case? Again, in your instructions as you’re setting this up or as you’re potentially modifying it on an annual basis.

 

A dedicated adjuster is one that only works directly for you. So you work with Jane Smith, Jane’s your go to girl. She’s there handling all of your cases, or Jane and John if you’ve got more than one. Designated means that Jane or John works only for you, but they also work for XYZ Company as well.

 

You can develop a relationship. We talk about having your adjuster so much as being this key part of your team, demonstrating them gratitude, bringing them along, really having them as a main cog in your wheel. Setting up these relationships is a great way to do this. You could spend more money on a designated or dedicated adjuster. It’s going to cost you more out of the gates, but it can save you a huge amount.

 

 

Adjuster Case Loads

 

Same thing as we’re looking at these case loads. So adjusters with lower case loads do a better job. Adjusters with lower case loads do a better job. You don’t need a lot of research to figure that one out. It’s just common sense. If you’re handling 50 cases versus 500 cases, you’re going to do a better job on the 50 then you are going to do trying to handle the 500.

 

So one little quick tip here, this is something that you can define within your instructions. Also, do they have an admin support? So does your adjuster have administrative support? They can have a higher case load and do an equally good of a job if they have an admin support helping them to process a lot of that paperwork.

 

So something to think about and look at and ask your carrier, ask your TPA if this is an option and then look at those outcomes of how you can really best set that up.

 

 

Adjuster Experience Level

 

Then your experience level, do they have five years, do they have ten plus years of experience? You can negotiate this in your contract. You can negotiate I want my adjusters to have ten years plus experience, or I want them to have ten years plus experiences on these certain types of cases, the lost time cases, the catastrophic cases, whatever it is. You can define that.

 

Another thing you might want to do is if you look at this and they say, “Sure we can that but it’s going to cost you action.” You kind of choke up on that amount. You could say, “We want a mix step. We want ten years plus experience to be working with some of the newbie adjusters on those medical only files so that they have that supervision, they can deliver those outcomes.”

 

So all different things to look at and think about as you’re setting up these adjuster relationships. Once you do, then show them that gratitude. Bring them that coffee in bed. Take them to lunch. Show them that gratitude for the work that they’re doing. When you do, they’re going to deliver much better outcomes.

 

Again, my name is Michael Stack. I’m the CEO of Amaxx, and 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 - AmaxxAuthor 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.

 

Stop The Bleeding! Control Workers’ Comp Leakage

control hard and soft workers' comp leakageSelf-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.

 

 

Michael Stack - AmaxxAuthor 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.

Surveillance in Workers’ Compensation

Surveillance in workers’ compensation plays an important role in resolving claims and detecting fraud.  Given its expenses, there are various factors members of the claim management team need to consider before hiring a service provider to conduct surveillance.  If these issues are not considered, the bottom line of a workers’ compensation claims program will suffer.

 

 

Surveillance in Workers’ Compensation Basics

 

The purpose of hiring an investigator in workers’ compensation cases is to observe and document the movements of an injured employee.  This allows the defense interests to introduce first-hand evidence into a hearing on the merits to demonstrate what someone is doing and their functional abilities – when they do not think someone is watching.

 

The first and most important step in hiring a service provider to assist with this activity is to find someone who is credible, ethical, and experienced.  Failing to take these factors into consideration can result in adverse findings.

 

 

When Should Surveillance be Used?

 

Not every case requires the use of a private investigator.  Instances where surveillance in workers’ compensation can either be helpful or have an effective impact include the following:

 

  • Instances where credible information of fraud is received and the injured employee’s movements and activities need to be closely monitored;

 

  • Cases where the employee is working an unreported second job or engaging in “cash” driven business activities. This can include employees who might be more active in certain times of the year;

 

  • Claims involving employees with a long history of work and other personal injuries. “Frequent fliers” should always be given special attention;

 

  • Employee’s who exhibit signs of malingering or are presenting at their medical appointments with conflicting pain complaints; or

 

  • Injuries that occur under unique or interesting circumstances. Examples include the “Monday morning” injury, injuries that occur before or after lay-offs, or during times of labor disputes.

 

 

 

Getting the Right Background Information

 

Background information on the injured employee’s habits is important before using an investigator for surveillance in a workers’ compensation case.  Given the cost and time involved, it is important to know when someone will be at a particular location and at what times.  Information that can be useful and collected via discovery can include:

 

  • Dates and times of doctor appointments;

 

  • The date and location of the independent medical examination or various workers’ compensation proceedings;

 

  • Places where the employee frequents such as attending religious services, social events and clubs, and restaurants or sporting events; and

 

  • Hobbies and other activities such as gardening, other yard work, or coaching a sports team.

 

 

Other Sources of Free Information

 

The advent of the Internet has created a treasure trove of free information.  This includes where they were born, lived (including specific address), and photographing or postings commonly found on social media.  Members of the claim management team who use social media for background information on an injured employee should be mindful of some simple rules:

 

  • Research on information open to the public is generally fair game when it comes to access by an adverse party. If someone does not closely lock down their security settings on platforms such as Facebook, Twitter, or Instagram, the information in the public domain can be used;

 

  • Use of a third party or “straw man” to connect to an injured employee is generally unethical and can result in information obtained from the query to be inadmissible; and

 

  • Asking for passwords from an injured employee is illegal in some states. That does not prevent defense counsel from bringing a motion to compel to obtain a court order for passwords.  Case law in this area is developing.

 

Interested stakeholders should look beyond social media and access genealogy websites.  Again, if information is published online and not obtained via mischievous means, it will likely be admissible.  Any useful information online should be printed and/or electronically stored immediately.  This is because information can be deleted, removed, or locked down just as quickly as it is posted.

 

 

Conclusions

 

Surveillance in workers’ compensation will always be a part of strong defense. When used, it should be done in an ethical and legal manner.  It must also be used in a cost-effective manner to avoid excessive spending and preserving the stability of a workers’ compensation program.

 

 

 

Michael Stack - AmaxxAuthor 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.

Successfully Communicate With Your Work Comp Claims Adjuster

5 Workers’ Comp Communication Strategies to Ramp Up Your ProgramA good insurance adjuster can help minimize the costs of a workers’ compensation claim. For your adjuster to do their best job for you, you must give to and get from them thorough information. You must completely document workers’ compensation claims, starting at the time of the injury. As your employee recovers or even worsens, you need to have every step in the process documented. Because a proactive adjuster will coordinate and manage the employee’s medical care and return to work, you need to maintain contact with the adjuster to check on the claim status of your employees’ comp cases.

 

 

Communication is Key

 

After your initial contact with the adjuster following the injury, you must periodically have follow up communication. A good adjuster is a good communicator that documents all contact. Open communication allows for the exchange of information between the employer and adjuster about the claim and ideas on assisting the injured employee while moving the claim forward. The best adjusters completely document each phone call, e-mail, medical bill, medical report, attorney letter, state filing, etc. in their files.

 

The adjuster also needs to have good communication with the injured employee. When an adjuster establishes rapport with an injured employee early on in the process, the probability of future attorney involvement is decreased. The adjuster will also be better able to identify any compensability issues and to make timely payment of benefits. In a severe claim, early employee contact will help with immediate medical management.

 

Use a contact form designed to gather information. Initially, you should use the form for a live interview. On subsequent contacts, you might want to continue to have live conversations rather than just having the adjuster fill out the form. This allows both of you to sign off on the document.

 

We have a form that will help you to remember to ask all appropriate questions in every case. You will also be using the same language each time you have a workers’ compensation claim. This will remove individual personal differences from what should strictly be a professional arrangement.

 

 

Gathering Information

 

Include all the basics. Even if this information is documented elsewhere, it is important to include all basic data. It is easy for a simple mistake or misread number to be repeated if just copied over and over. These typographical mistakes can lead to big hassles in getting employee medical records if not corrected. Be sure to include:

 

o Employee social security number

 

o Date of injury

 

o Your company name

 

The employee’s current condition. The adjuster should be informed about the injured employee’s current medical condition and whether the injury requires physical therapy or surgery.

 

The employee’s medical history. The adjuster needs to know about the injured employee’s medical history as this may affect the causality of the injury, the course of treatment and what a typical timeline for recovery may be.

 

The relationship with the doctor. Ask the adjuster what their relationship is with any medical providers and whether thorough communication is being provided.

 

Claim validity. Document if there are any questions as to the validity of the claim and about the employee’s attitude about returning to work.

 

Specific time deadline. Give your adjuster a deadline, no more than 24 hours in advance, for the adjuster to get back to you with specific suggestions as to how to resolve the case.

 

 

Workers’ Comp Cost Containment Program

 

Your adjuster can also help you implement your workers’ comp cost containment program. Once you implement your program, gain your adjusters’ cooperation and participation by telling them you appreciate them.

 

 

Michael Stack - AmaxxAuthor 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.

 

6 Ways Insurance Companies Control Workers’ Comp Claim Leakage

workers comp claim leakageWhen you review your broker’s or insurer’s website, there is one subject in workers compensation that most brokers and insurers never mention – leakage. Leakage in an insurance claim is any payment that is more than the payment should be. Leakage is defined as the difference between what the claims office spent and what they should have spent. Leakage is also been defined as lost opportunities to save money.

 

 

Workers’ Comp Claim Leakage Becomes Employer Expense

 

As workers compensation premiums are directly tied to the frequency and severity of employers’ claims, you will never hear the workers comp insurer say, “We did a poor job controlling the cost of your claims.” Their leakage becomes the employer’s expense through higher insurance premiums.

 

 

5 main causes of workers comp claim leakage:

 

  1. Inadequate claims handling.
  2. Judgmental mistakes.
  3. Poor claim processes.
  4. Overpayments.
  5. Bad customer service.

 

While leakage can be caused by any one of these areas, it is often a combination of them that results in leakage.

 

There are about as many forms of leakage in workers compensation as there are workers comp subjects to be discussed.

 

 

10 examples of workers’ comp claim leakage:

 

  1. Payment of medical bills without adjustment to the fee schedule.
  2. The failure to properly investigate compensability and payment of claims that are not covered.
  3. The failure to pursue subrogation.
  4. The failure to utilize the early return-to-work program of the employer.
  5. The failure to properly manage utilization review opportunities.
  6. The failure to control the selection of the medical provider in those states where the employer controls the medical provider selection.
  7. The selection of inadequate defense counsel.
  8. The failure to pay medical benefits or indemnity benefits timely resulting in fines and/or penalties.
  9. The lack of automation and/or technology in the process where it could be utilized.
  10. The additional management and administration time due to any mistake in the claims handling.

 

The list could go on and on. Any failure to control the insurance claim can result in leakage.

 

 

Leverage Technology to Identify Leakage?

 

Some consultants and insurance brokers who attempt to identify leakage by the use of computer outcome modeling or algorithms. These provide a detailed report reflecting payment areas in which the employer’s claim cost exceed the average for their industry or the employer’s prior lost history. When the employer has thousands of claims, automated methods can identify some possible areas where there is leakage, but will miss many others. When the employer does not have thousands of claims, the cost averages can be influenced by a few outlier claims making the identification of leakage by computer averages less reliable.

 

 

An example of how computers and algorithms fail to identify leakage: A computer average for indemnity paid will not show the failure to contest small claims that should been investigated and denied. Because it is easier for the adjusters to pay numerous small claims rather than contesting them, the behavior looks like superior performance on a computer average, though, in fact, every small claim that was paid but should not have been, is leakage.

 

 

A better way to control leakage is the utilization of these 6 time-proven methods:

 

  1. Having an established set of best practices for workers compensation claims.
  2. Proper education and training of the workers’ comp adjuster including state statutes, customer service, and claims-handling practices.
  3. Excellent education and training of all support staff.
  4. Linking salaries and pay raises to compliance with best practices.
  5. Having an established work-flow process.
  6. Incorporating automation and technology into the claims process.

 

An integrated approach incorporating all of the methods will eliminate most leakage.

 

If you feel like there is leakage in handling your workers compensation claims, there probably is. Identification of various forms of leakage on your claims can be done through a claims audit. An experienced quality assurance auditor will be able to point out where leakage has already occurred and identify situations where mistakes have already been made, but can be corrected before additional money is paid. If you would like to discuss a leakage audit of your insurance claims, please contact us.

 

 

 

Rebecca ShaferAuthor 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/

 

©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.

 

Responsibilities of a Workers’ Comp Claims Investigation Leader

workers comp claims leadershipCentral 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.

 

 

 

Michael Stack - AmaxxAuthor 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.

Why Work Comp Claims Become Old Dog Claims

old dog claimsEvery 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.

 

 

 

Michael Stack - AmaxxAuthor 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.

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