Understanding Rights of Recovery: Dealing with Liens in Work Comp

Members of the workers’ compensation claims management team are faced with many challenges.  One of these tests includes the resolution of liens, intervention claims and other interests as part of settling a claim.  Failure to consider and resolve these interests can be detrimental to effective claims settlement and negatively impact a program’s bottom line.

 

 

What is a Lien? Why is it Important?

 

According to Black’s, a lien is “The principle under which an insurer (or another party) has paid the loss under an indemnity policy is entitled to take on all the rights and remedies belonging to the insured against a third party concerning any injuries or breaches covered by the policy.”  Under this legal principle, members of the claims management team need to proactively identify, provide notice to and resolve interested third-parties for medical care and treatment (or other benefits) related to a workers’ compensation claim.  Failure to take these important steps can result in the insurance carrier or insured being subjected to fine, penalty or future repayment.

 

 

Medical Providers and Health Insurance Liens

 

Some of the most common liens in a workers’ compensation claim include those asserted by medical providers or health insurance carriers.  These liens typically arise in the following situations:

 

  • Denial of primary liability;

 

  • Assertion of an affirmative defense after liability is accepted. Common situations include defenses related to the reasonableness or necessity of medical care, or treatment parameters issues; and

 

  • Payments mistakenly made by a health insurance carrier for treatment not properly submitted to the workers’ compensation carrier for payment.

 

 

Providing Notice to Interested Third Parties

 

In many jurisdictions, the parties to a workers’ compensation claim are responsible for including these interested parties in the claim, including taking the following steps:

 

  • Putting the medical provider or health insurance carrier on notice of their rights under the state workers’ compensation law;

 

  • Including the interested party on all pleadings served and filed during litigation; and

 

  • Making good faith efforts to resolve the intervention claims if the matter resolves before a hearing on the merits.

 

State laws that require notice of intervention rights typically include provisions where a party can extinguish recovery rights of non-responsive third party.

 

 

Adopting Best Practices to Lien Resolution

 

Members of the claims management team need to be proactive and scrutinize claims made by medical providers and health insurance carriers.  Part of the process includes affirmative defenses one can assert related to these claims.  It is important to be mindful of such issues as notice, statute of limitations, prohibited acts defense and employee intoxication to name a few.  Additional areas to consider include:

 

  • Recovery by the interested third party only in instances where the employee receives a settlement, judgment or award;

 

  • Requiring the third party to prove the medical bills are related to the workers’ compensation claim. This proof must include a close review of all bills and claims to ensure it is related to the work injury; and

 

  • Requesting a copy of an applicable health insurance policy. In some instances, the policies ability to recover may be limited by Plan language.  In some instances, a group health plan may be self-funded by the employer.  In these cases, the Plan may be willing to waive its entire claim.

 

In cases where there is a settlement, members of the claims management team should seek a settlement with the third party based on a reduced amount.  Arguments need to be made that include the strengths of defenses available to the employer/insurer and weaknesses of the employee’s claim.

 

 

Conclusions

 

Members of the workers’ compensation claims management team need to be proactive when it comes to the settlement of liens and intervention claims.  It is important to remain proactive on these matters and understand the recovery rights of all parties.  It is also important to treat all parties fairly and with respect.  Taking these steps can effectuate settlement and reduce 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/

 

©2018 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.

5 Circumstances To Review Work Comp Claim Subrogation

When a work injury occurs sometimes there is no one to blame other than the worker.  This could be from lifting too much at one time, trying to work too fast, or from simply doing too much at one time.  These types of claims are typically straightforward and easy to investigate.  If a person injures their back from repetitive lifting, the lifting of materials is the cause or mechanism of injury. Right? Maybe not.

 

But what if the injury happened due to some other outside force?  Maybe an outside vendor an employer uses from another company is walking through the halls cleaning or waxing the floor and fails to place signs to not walk in that area. And a worker falls and fractures an arm.  What to do then?

 

There are a lot of varying factors and legal issues in the world of subrogation that vary from state to state.  But, it is worth exploring some sort of recovery to recoup medical expenses and wage loss paid.  Subrogation should be explored in every claim, even if it seems the injury was due to simple “employee operation error.”

 

 

What is Subrogation?

 

Subrogation is the right for an insurer to pursue a third party that caused an insurance loss to the insured. This is done as a means of recovering the amount of the claim paid to the insured for the loss.

 

 

  1. Slips and Falls

 

When a new claim is received from a slip or fall, the first question to ask is where the accident occurred.  Let us say this happened in a parking lot of the employee’s work place.  Why did the employee fall?  Was it snowing?  Was the lot plowed and salted properly if the fall was in the winter? Was it plowed previously then more snow accumulated?  Did any other employees fall or notice slippery conditions?

 

This is most important when having an outside vendor that is hired to maintain the outside premises during winter months.  If this is the case, then there may be a subrogation claim to pursue.  If the outside vendor had a duty to maintain the premises, and failed to do so, then it can be argued depending on the jurisdiction.

 

Now say that an employee fell in a hallway or in a bathroom.  Was an outside vendor onsite to wax or clean the floors and forgot to wipe up some water that caused the employee fall? Was the area roped properly with warning signs?  Where were the signs located? Did anyone else see the signs?  Again, if a maintenance contract exists with this company, there is a claim to pursue.  Winning a subrogation claims can mean that the outside vendor pays the employer back expenses to get the worker back to full duty.

 

There are many employers that choose to use outside vendors for this specific reason — to shift the risk to an outside vendor.  Any failure to properly mark areas as being worked on or being “wet” can result in the pursuit of a subrogation claim.  The same goes for parking lots and sidewalks.  Some vendors will allow employers to list demands for winter care when the need for salting, sanding, and snow arrives.  The employer can be as rigid as preferred (with some vendors) and this way if an injury does occur, the expense shifts to the other carrier rather than incurring the total cost of the medical and wage expenses under the employer’s carrier.  Every carrier usually has a subrogation unit to pursue injuries.

 

 

  1. Tripping over something

 

Did an employee fall over a mat that was not placed down properly?  Did a worker stumble and fall due to a rug or placemat that had holes in it or it was not in proper working/functioning order?  Again, using an outside vendor to maintain these areas and rugs can help if an injury occurs.  These vendors have a duty to properly place the rugs or mats, and these floor coverings have to be in proper working order.  Now it can be asked  “How can a rug not be in proper working order?”  If a rug is down on the floor, it is in working order. But, maybe these rugs are old and worn out in certain areas, and therefore they are not as productive as they should be. They are ineffective for the purpose.  Employers use entry and exit rugs and carpets, relief mats in front of machines, anti-slip strips on steps, etc.  If any of these are in disrepair or appear in poor shape, and an injury occurs, it could be a subrogation claim.  This vendor may be responsible for failing to replace these worn items, again shifting the risk and expense from you the employer to them.

 

 

  1. Machinery injuries and Mechanical failures

 

When there is a claim where a person gets injured while using a machine, the manager will usually say that the employee was not paying attention when the injury occurred.  This may be true, but also machine manufacturers have a duty to design proper, safe equipment.  Sometimes machines have design flaws and can lead an injury. Maybe there should be a guard in a certain area where there is not one, a hand can reach an area it should not be able to reach, or the machine does not turn off all the way, even though the switch is turned fully to the off setting. All of these issues can result in injury, and the company that makes the machine can be held responsible.  This will involve the carrier bringing a machine expert, or engineer, but it can be worth the cost, especially in a severe injury.

Do not be so quick to point out operator error as the sole cause to an injury involving a machine.  The operator may have made a mistake, but the problem may stem from deeper design issues.

 

 

  1. Vehicle Accidents

 

In certain states the driver that causes an accident can be held liable.  The worker may have been doing nothing wrong other than driving down the road, when another vehicle slammed into the vehicle from behind.  Maybe the vehicle that hit the employee’s vehicle is from another company.  Even though the van may not be marked as a commercial van, it still could be a business van used for company purposes.  Who owns this vehicle that hit the employee?  What was the driver doing? Where were they going, and why did the accident occur? Motor vehicle accidents can be severe.  If there is subrogation in a vehicle case, a thorough investigation is worthwhile.

 

 

  1. Injuries from other vendors on your premises

 

If a vendor is on the premises conducting normal business, and an injury happens, there could be subrogation potential.  Maybe the cart slid away and hit the employee.  Maybe a vehicle or other mode of transportation on the jobsite was being used, lost control and hit another worker, or the vendor was unloading supplies in the back area and while stacking boxes and the boxes landed on the employee.  The subrogation unit will determine if this vendor is responsible for the injury, and they could have to reimburse you, the employer, for the cost to heal an injured worker.

 

 

Summary

 

Subrogation investigations and claims can come from injuries where employers least expect, and there are many different circumstances that caused the injury.  Talk with the carrier about subrogation and if the carrier has a unit dedicated to only subrogation investigations and the pursuit of subrogation claims.  It can save a substantial amount of claims expense, especially on those severe injuries.  The subrogation department should be reviewing every injury to see if a claim can be pursued. And every claim pursued could yield the employer reimbursement from another carrier.

 

 

 

Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is 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 of COMPClub, an exclusive member training program on workers compensation cost containment best practices. Through these platforms he is in the trenches on a working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.

 

 

©2016 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.

 

Strengthening Work Comp Programs through Aggressive Subrogation Recovery

The job of a workers’ compensation claim handler and manager goes beyond serving their clients and injured workers.  It also includes watching out for a programs bottom line and seeking creative solutions to complex problems.  This job includes a number of different tasks.  One important role in this area is identifying potential subrogation issues.  This results in reimbursement of monies paid out by a program from third parties playing a role in the work injury.

 

 

Subrogation Defined

 

Subrogation is defined by Black’s Law Dictionary as, “The principle under which an insurer that has paid the loss under an indemnity policy is entitled to take on all the rights and remedies belonging to the insured against a third party with respect to any injuries or breaches covered by the policy.”

 

 

Better Understanding Subrogation

 

To put this in plain English, subrogation is the opportunity to recover under a legal theory when the workers’ compensation insurer is required to make payment in the form of benefits to a party sustaining injuries due to the conduct or action of another.  Imagine the following situation:

 

Employee sustains a work injury while operating a power tool.  As a result of the work injury, the Insurer pays for various medical and indemnity benefits to and on behalf of the Employee.    During the course of investigating the work injury, Insurer discovers the power tool used by the Employee had a design defect.  While the Insurer is obligated to pay for various workers’ compensation benefits, the Insurer also has a right of subrogation against the manufacturer (and other parties) responsible for the defective product.

 

 

Work Comp Subrogation in the Real World

 

Opportunities to seek subrogation happen in more instances than one would think in the modern workplace.  This requires that members of the claim management team investigate their cases and seek opportunities to recover monies in instances where another’s conduct played a role in the injury.

 

Motor vehicle accidents:

 

MVAs are the leading area of subrogation in workers’ compensation claims nationwide.  Every day, thousands of people are involved in MVAs that take place in the course and scope of their employment.  This is an area, which is subject to legal standards outside the area of most non-attorneys understanding.  It is important to consult with attorneys as to the likelihood one can obtain recovery.  When investigating these types of cases, it is important for claims handlers to:

 

  • Obtain police reports regarding the MVA;
  • Secure photographs, witness information and statements as to how the accident occurred; and
  • Determine what insurance companies are involved.

 

 

Premises Liability:

 

The traveling employee or people who work at another’s property are subject to numerous hazards.  This includes parking lots or facilities that are not properly maintained, wet or icy surfaces and other perils.  It is important to act quickly when these types of injuries occur as key evidence can get changed/altered and even destroyed—sometimes accidently.  Key investigation tips include:

 

  • Photographs of the accident scene;
  • Investigate and obtain information as to witnesses to the incidents and their connection with the premises involved; and
  • If these incidents take place at construction site, it is important to obtain information on the use of safety equipment and any OSHA investigation information.

 

 

Products Liability:

 

These incidents occur when employees are working with machinery, heavy equipment and power tools.  It is also important to act fast to preserve the potentially problematic item that contributes to the injury.  It is also important as part of your investigation to determine the following:

 

  • The make, model and year of purchase of the equipment causing the injury; and
  • Whether there were any alterations to the equipment or machine causing the injury, and who made/ordered the changes to be made.

 

 

Conclusions

 

Effective subrogation is an important aspect of every workers’ compensation program.  While the insurance carrier is still required to compensate the injured worker, the recovery of those funds leads to a successful and cost-efficient program.

 

 

 

Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is 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 of COMPClub, an exclusive member training program on workers compensation cost containment best practices. Through these platforms he is in the trenches on a working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.

 

 

©2016 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.

 

Effectively Use Subrogation To Get Your Money Back

Part of any successful workers’ compensation program is the ability to recovery monies paid out when others may be at fault or have contributed to the work-related injury.   Having a successful subrogation and recovery program not only includes the ability to understand the law, but implement it in an effective manner.

 

 

What is Work Comp Subrogation?

 

According to Black’s Dictionary, subrogation is “the principle under which an insurer that has paid the loss under an indemnity policy is entitled to take on all the rights and remedies belonging to the insured against a third party with respect to any injuries or breaches covered by the policy.”  In non-technical language, the insurance company has paid money as the result of someone else’s actions or wrongdoing.  It is now time to get your money back.

 

 

Subrogation in Workers’ Compensation Cases

 

Opportunities for financial recovery from another party arise in a number of instances in workers’ compensation cases.  Some common examples include:

 

  • Motor vehicle accidents where the other party is at fault;

 

  • Products liability cases; and

 

  • Premises liability cases.

 

 

A Step-By-Step Process

 

Successful subrogation in workers’ compensation requires work of the claims management team.  This includes coordination with attorneys who assist in the defense of claims.  Important steps of a successful subrogation action include:

 

  • Understanding the law. Every state law is different when it comes to subrogation actions.  It is important to know the law in the jurisdiction of your claim and apply it to the case.  Sometimes the attorney assisting on the defense of the claim will understand the issues and be able to pursue a subrogation action, while at the same time defend the claim.  If this is not the case, efforts should be made to obtain effective counsel separate from the workers’ compensation matter.

 

  • Investigating the injury. Every claim starts with an effective investigation of the injury.  This includes uncovering the basic facts of the case and developing a plan to minimize exposures.  When another party contributes to the injury, a claims handler should consider a simultaneous subrogation action.  Being successful in this action includes uncovering information regarding injury causation, witnesses and evidence to support the action.

 

  • Preserving evidence. Failure to preserve evidence in a subrogation action can be fatal to obtaining future relief.  A common example is not preserving evidence such as defective work equipment that resulted in an injury or detailed accident information.  In other instances, it can include not documenting the conditions of surfaces via photographic evidence.

 

  • Cooperation of the Employee. Cooperation of the employee in every subrogation action is essential.  In some instances, it is required.  The employee has sustained a work injury and has a different interest than that of the employer/insurer.  The employee’s attorney has an ethical and fiduciary obligation to their client.  These obligations can still be preserved while at the same time assisting defense counsel and the claim management team on subrogation issues.  In most instances, they will have access to information that cannot easily be obtained.

 

  • Issues concerning assignment of rights. The assignment of rights to a claim and the right of subrogation are different concepts and it is important there is no confusion if this issue is discussed during settlement of a workers’ compensation claim.  This is a complex issue.  Consultation with an attorney who specializes in the area of subrogation should take place if this becomes an issue.

 

 

Conclusions

 

Subrogation is an important component of a cost-effective workers’ compensation program.  Members of the claim management team do not need to be experts in this area of the law.  However, they must understand the legal concepts and what information can assist legal counsel as they pursue recovery.

 

 

 

Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is 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 of COMPClub, an exclusive member training program on workers compensation cost containment best practices. Through these platforms he is in the trenches on a working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.

 

 

©2016 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.

 

 

Use Your Imagination When Looking For Recovery / Subrogation

Several adjusters are quick to rule out subrogation during the investigation phase of their files, especially when the issue or injury is due to “Human error” and not necessarily due to a third party.

 

I see this as incentive to get creative.  Taking a step back to see what exactly happened and how this worker became injured is the fun part of solving the claims subrogation mystery. 

 

 

The Case of The Hidden $900,000 Recovery

 

For example, I read about a case where a worker had a large square container on a crane.  His supervisor told him to ride on top of the container to get to a higher level instead of going out to get the lift truck.  For whatever reason, this worker agreed.  The container was clearly marked that riding on it is dangerous and can result in injury.  The crane was marked with numerous labels saying not to lift people on items, and so on.  Plus, the supervisor told the employee to ride on the container. 

 

Based on all of that, it should seem clear that there is no subro on this case.  This worker obeyed a command from his direct supervisor.  The supervisor was the one that made the error in judgement.  This worker riding the container fell off of it and sustained a traumatic brain injury.

 

Most carriers would give up at this point, as it is clear the subro case is probably not existent.  However, this carrier discussed the case with Counsel and subrogation experts, and they saw an angle about how to pursue premises subrogation on the carrier that had the risk where the construction job was located.  Months later, the subro case was settled to the tune of a $900,000 recovery.

 

Adjusters as a whole are bombarded with information.  They are in charge of costs, contacts, claims, medical, vendors, legal aspects, meetings, phone calls, emails, you name it.  They are sometimes stuck in a rut of compensable claim investigations, boring investigations, and worrying about pointless metrics on indemnity claims. 

 

 

Take A Step Back And Think About Possibilities

 

The subro case above is the type of case where the job is interesting, and challenges you to take a step back and think about possibilities. 

 

Even in a situation as clear as this where on the surface a supervisor commanded a worker to ride a container, subrogation and recovery possibilities can lie dormant in plenty of claims.  If you find an angle to do subro on a case where someone else ruled it out as impossible, you are going to look like a champ in your office.

 

The challenge is to find the time to look at it with a different set of eyes.  This is not to say that you are going to take every file and start firing off subro notice letters on all of them, but I suspect plenty are out there where a subro letter may yield some results of recovery.

 

 

Case #2 Example of Subrogation Potential

 

Case #2 to prove my point, a worker fell off of a rented hi-lo.  He slipped off when his boot slipped on a step.  This was an old hi-lo, it had no grab bars, no cage, and no anti-slip materials on the floor of it.  When placed on notice, the rental company resisted settlement.  The carrier then added in the manufacturer of the hi-lo, because the enclosed step was a hazard itself. 

 

The step posed a risk because of work boots.  Even the person with the smallest foot could never fit their foot in the step because the step is not big enough.  It is made for people that wear tennis shows, and not steel-toed boots. 

 

This case is still going on, but I suspect they may have an angle on that case for a recovery of some sort.  The rental company failed to maintain the hi-lo with anti-slip surface on the floor, and the makers of the hi-lo had a poor design with the “step” that was put in to help workers.  The step itself actually made the hi-lo more dangerous.  Plus no grab bars, no cage, etc. 

 

So you see you can try to push subro on anything.  The worst that can happen is that the other carrier will tell you no.  Keep pushing those cases in to the pipeline, and you will land a trophy recovery sooner or later. 

 

 

Author Michael B. Stack, Principal, COMPClub, Amaxx Work Comp Solutions. He is an expert in employer communication systems and helps employers reduce their workers comp costs by 20% to 50%. He resides in the Boston area and works as a Qualified Loss Management Program provider working with high experience modification factor companies in the Massachusetts State Risk Pool.  He is co-author of the #1 selling book on cost containment, Your Ultimate Guide To Mastering Workers Comp Costs www.reduceyourworkerscomp.com, and Founder of the interactive Workers’ Comp Training platform COMPClub. Contact: mstack@reduceyourworkerscomp.com

 

©2015 Amaxx LLC. All rights reserved under International Copyright Law.

 

SALES TO PAY FOR ACCIDENTS CALCULATOR:  http://reduceyourworkerscomp.com/sales-to-pay-for-accidents-calculator/

MODIFIED DUTY CALCULATOR:   http://reduceyourworkerscomp.com/transitional-duty-cost-calculators/

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

WORKERS’ COMP TRAINING: https://workerscompclub.com

 

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

 

File A Negligence Claim In Transportation Claims To Save Work Comp Costs

A new decision, “Pasternack, Tilker et al, LLP”, 2d Dept. (6/10/15) helps transportation companies with vehicle collisions which also involve a workers compensation claim. Often, the driver files for workers’ compensation and seeks the advice of a lawyer. The workers’ compensation firm accepts the work comp claim, but declines to pursue a negligence claim. If the negligence claim is pursued, the final result can be a much smaller workers compensation claim and substantial recoveries from a third party responsible for the accident. However, if the negligence claim is not pursued the employer will be, through its carrier, the only one paying.

 

 

Employers Carrier Should Get Right To File Negligence Claim in Vehicle Collisions

 

In the new case, the worker believed that the compensation firm was pursuing both the compensation claim and a negligence claim. The law firm showed that it had mailed the worker a letter declining to pursue the negligence claim but it could not show that the worker ever received it. The compensation firm has been sued for legal malpractice.

 

Such situations are far from rare. Vehicle accidents account for a large percentage of all compensation claims and are present on most accidents involving transportation. What could have been done to improve the employer’s position? If there is any chance that a negligence claim can be filed, the carrier can send a “use it or lose it” letter to the worker advising that if the worker fails to start a negligence claim the carrier will get the right to file it. When this occurs, the carrier usually settles with the negligence carrier quickly, as opposed to the drawn out proceeding when the worker sues.

 

 

Rapid Negligence Settlements With “Other Guy’s” Carrier Takes Pressure Off Work Comp Claim

 

Rapid settlements often result in better outcomes for the employer since they often eliminate the financial incentives for a lengthy workers compensation claim. In addition, when the employer’s carrier takes over a negligence claim it is in a position to learn far more of the details of the worker’s activities and medical history, leading to faster and smaller claims.

 

 

Employers Should Work With Carrier To Initiate Procedure

 

But the employer cannot do this on its own; the workers compensation carrier must initiate it. The employer, however, can remain in contact and urge active measures by the carrier. Such interaction usually leads to better overall results.

 

For decades, malpractice suits against workers’ compensation law firms was all but unheard of. Workers compensation rates in NY were among the lowest in the nation leading to little interest in malpractice suits. However, when a workers’ compensation firm becomes involved in negligence claims that changes. For transportation companies, proactive participation can have many positive returns.

 

 

 

Author: Attorney Theodore Ronca is a practicing lawyer from Aquebogue, NY. He is a frequent writer and speaker, and has represented employers in the areas of workers’ compensation, Social Security disability, employee disability plans and subrogation for over 30 years. Attorney Ronca can be reached at 631-722-2100. medsearch7@optonline.net  

 

©2015 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

SALES TO PAY FOR ACCIDENTS CALCULATOR:  http://reduceyourworkerscomp.com/sales-to-pay-for-accidents-calculator/

MODIFIED DUTY CALCULATOR:   http://reduceyourworkerscomp.com/transitional-duty-cost-calculators/

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

WORKERS’ COMP TRAINING: https://workerscompclub.com

 

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

 

 

Subrogation Equals Lost Gold In Workers Compensation

 

Employers are losing money every day because claim technicians are missing opportunities to recover monies from outside persons or entities that may have caused their employee’s compensable injury.

 

This recovery is known as subrogation.

 

Most claim technicians recognize the obvious automobile situation where the employee vehicle is struck in the rear by another vehicle. Successful recovery occurs in most of these claims.

 

Yet, these recoveries can be jeopardized by limited insurance on behalf of the striking vehicle.  If there is limited or no insurance the claim technician may give up trying to recover without investigating for perpetrator assets that might be attached or levied against.

 

 

History:

 

Before the 1960’s almost every claim technician was trained and handled claims for all lines of property and casualty insurance losses.  Most insurance carriers rotated their staffs.  Independent adjusters and third party administrators had to have staffs that could handle any type loss at any time.

 

Trained multi-line adjusters, who brought this knowledge to the workers compensation unit, were able to find recoveries from third parties more often and more effectively.

 

 

Why Adjusters Miss Opportunities for Subrogation:

 

Today, adjusters tend to limit themselves to one line of coverage for claim handling.  Property adjusters handle only property claims. Remaining lines, i.e. Liability, Auto, A&H, Workers Compensation, etc. are also handled by specialized technicians. It is getting harder and harder to find multi-line adjusters.

 

Added to limited knowledge and experience is training. Insurance company training departments are non-existent or limited.   Most training today takes place on the job.  It may be done by experienced fellow adjusters or supervisors.  The training is usually limited to the line of claim being handled.

 

These two points mean many workers compensation adjusters don’t know or think of subrogation potentials.

 

Other factors limiting subrogation recovery are: missing Statute of Limitation dates, failure to file appropriate liens, failure to take over the employee’s rights when they do not pursue a claim.  Many adjusters give up trying to recover as soon as they may be told no by the third party.

 

Adjusters fail to seek other assets when the third party has insufficient or no insurance.  Inappropriate waivers of liens, and failure to take credit for funds claimant receives from the third party.  Finally, adjusters may omit subrogation on small value compensation cases.

 

 

Subrogation Sources:

 

Some recovery potential may come from coverage issues, liability exposures, contract obligations, and warranties.  (Contracts have to be obtained, read, interpreted, and evaluated with legal departments.)

 

Research into required warnings, instructions, hold harmless agreements, service and maintenance programs are other arenas where a third party can becomes liable.  Food product contents should be explored for toxicity.  Machines and tools need to be evaluated for mechanical dangers, safety devices and malfunctions.  Chemicals used by employees need review for compliance with  Safety Data Sheets.

 

Power sources and fuels can be explored for possible dangers, operations, or extenuating situations.

 

 

Investigating Subrogation:

 

Actual observance of the loss scene gives an edge in determining the claimant’s veracity and allows for a more thorough investigation. Adjusters need to gather and preserve evidence with the proper chain of handling.

 

Photographs, diagrams, labels, contracts, instruction methods, maintenance records,  statements from all persons  involved , police reports, EMT records, fire department reports, newspaper accounts, safety data sheets and an autopsy report  (if done) are just the basics for subrogation potentials.

 

Another overlooked area for subrogation is through the medical aspect.  Mal practice, underlying pathologies that may have other treatments available, and previously compensated funds for like or same injury are just a few areas to investigate.

 

 

Subrogation Audits:

 

All facets of workers compensation loss management require regularly scheduled claim auditing of the claim units.   Subrogation review is usually a part of the audit. However, if employees are exposed to offsite travel, work, and other exposures where subrogation is a potential a special subrogation audit may be warranted.

 

 

Summary:

 

Subrogation recovery is being missed by many of today’s adjusters.  Many subrogation potentials are available to the employer.  Subrogation recovery requires exploring potential, proper investigation and vigorous pursuit.

 

 

Author Michael B. Stack, Principal, COMPClub, Amaxx Work Comp Solutions. He is an expert in employer communication systems and helps employers reduce their workers comp costs by 20% to 50%. He resides in the Boston area and works as a Qualified Loss Management Program provider working with high experience modification factor companies in the Massachusetts State Risk Pool.  He is co-author of the #1 selling book on cost containment, Your Ultimate Guide To Mastering Workers Comp Costs www.reduceyourworkerscomp.com, and Founder of the interactive Workers’ Comp Training platform COMPClub. Contact: mstack@reduceyourworkerscomp.com.

 

©2015 Amaxx LLC. All rights reserved under International Copyright Law.

 

SALES TO PAY FOR ACCIDENTS CALCULATOR:  http://reduceyourworkerscomp.com/sales-to-pay-for-accidents-calculator/

MODIFIED DUTY CALCULATOR:   http://reduceyourworkerscomp.com/transitional-duty-cost-calculators/

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

WORKERS’ COMP TRAINING: https://workerscompclub.com

 

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

 

Workers Compensation Second Injury Fund Alert

Problem

Employers get little to no relief from state workers compensation second injury funds.  Many state second injury laws are weak, ill defined, are hard to penetrate, and may lack proper funding. Rules and regulations make it hard for a claim to be  acceptance by a second injury fund..

 

Funding programs for second injury funds vary greatly. Some are funded from insurance carrier premium assessments.  Others are funded from state budgets and legislative action.  Most funding programs may fail to meet the fund exposures or liabilities.  This means that even if a claim is accepted by a fund, the employer may not be able to recover their expended funds. The employer has to handle and pay the claim before seeking reimbursement from the second injury fund.

 

 

Background and Liability

Second Injury Funds and rules became prevalent after World War II as a program to induce employers to hire handicapped veterans.   By then workers compensation law, legal precedent, and regulation had clearly established that the employer took the employee as is.  This meant any employee with an underlying pathology or disability, who sustained a compensable injury which aggravated or increased the overall heath or disability costs had to be borne by the employer.

 

The second injury fund program gave the employer relief from the expense of the aggravation or increased disability. The fund would take over the claim handling and cost after certain set periods of time or at the end of normal work injury recovery periods.

 

Despite the current calls for employers to hire veterans, states have done little to nothing to bring second injury funds up to standard to ease the employer’s burden for military injuries.  As a result all veterans, especially Iraq and Afghanistan veterans are meeting hiring resistance.

 

More states are moving to legalize marijuana for recreational purposes.  The user’s health consequences will present great challenges to the employer.  Unlike tobacco and alcohol, marijuana effects can remain in the body for several days.  The dangers for permanent injury by marijuana are not being publically exposed like tobacco and alcohol.

 

 

A Strong Policy is Mandatory

Most second injury funds require that the employer has knowledge of the employee’s pre-existing condition prior to the compensable injury that invokes increased disability.  Employer knowledge can be established through: pre-employment physical examinations, prior compensable claims where the condition became known, accident and health claims (care needs to be invoked due to privacy law and rules), employees volunteering information on job applications, or in the course of employment. A private investigator might also be of assistance to review the employees’ disability background.

 

When the employer learns of the pre-existing condition the personnel file needs to be documented.

 

It is strongly recommended that the policy be well written, cover all know current contingencies, and be firmly adhered to.  It is best to have professional assistance from legal counsel, or organizations specializing in developing such programs.

 

When an injury occurs that might cause exposure for aggravation and increased disability, it is suggested that the file be given strong medical management by professional medical managers.  They will know the basics as to how to develop information for submission to the second injury fund.

 

 

Get Involved Legislatively

There needs to be pressure put on legislative bodies to fund and revamp second injury funds.   Explore what groups or organizations might be actively working for legislative action in the second injury fund legislation.  Determine which groups might be advantageous to support.  Then move forward to add assistance.

 

 

Summary

The financial exposure is growing for pre-existing aggravation and increased disability for workers compensation claims.   It is becoming harder for employers to recover claim costs from state second injury funds. Strong policies must be developed and adhered to for pre-existing conditions exposure. Use professional help to develop and implement policies, and keep them current with annual reviews. Finally, join effort groups working to accomplish legislative funding and reform.

 

 

 

Author Michael Stack, Principal of Amaxx Risk Solutions, Inc. He is an expert in employer communication systems and helps employers reduce their workers comp costs by 20% to 50%. He resides in the Boston area and works as a Qualified Loss Management Program provider working with high experience modification factor companies in the Massachusetts State Risk Pool.  As the senior editor of Amaxx’s publishing division, Michael is on the cutting edge of innovation and thought leadership in workers compensation cost containment. http://reduceyourworkerscomp.com/about/.  Contact: mstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

SALES TO PAY FOR ACCIDENTS CALCULATOR:  http://reduceyourworkerscomp.com/sales-to-pay-for-accidents-calculator/

MODIFIED DUTY CALCULATOR:   http://reduceyourworkerscomp.com/transitional-duty-cost-calculators/

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

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

 

Completing A Subrogation Investigation

Subrogation is a large part of the investigating and handling of insurance injury claims.  Most times a lot of carriers will sign off on subro because they feel the injury was due to operator error or a safety violation in general.

 

Yes machine operators or manufacturing employees in general make their fair share of errors, but there are some good guidelines to remember before you rule out subrogation:

 

What was the root cause of the injury?

Any time a machine injures an employee, you have to make sure the machine is not touched or altered until an adjuster or field adjuster can get out to the scene and investigate.  This includes taking pictures, obtaining machine operation manuals, purchase orders, company safety protocol, training records, and so on.  The machine should be locked and tagged out, and roped off from further use until the investigation is complete.  Once the machine is used again, you lose out on a chance to complete a thorough investigation.

 

 

Consult Counsel promptly after obtaining all of the injury details.

Once your investigation is complete, you have to talk to your attorney of choice about what options you have, if any.  Let the attorney provide you with the next steps in what to do and who to place on notice for your subro claim.

 

 

Complete a recorded statement from the injured worker and from any applicable witnesses.

Subrogation claims take a long time to be worked up to completion.  This can take months to years in duration.  The last thing you want is to chase around witnesses months later to find out details concerning the injury.  The more time that goes by the less likely they will remember details important to your claim having a successful outcome.

 

 

Gather all paperwork on the machine and the purchase details from the employer.

You also need a lot of information from the employer.  This includes purchase info, maintenance records, leasing paperwork if applicable, how much the machine has been used in daily operations, how the training of operating the machine is completed and who performs the training, and so on.  A good rule of thumb is that you would rather have too much information versus not enough.

 

 

Find out if you can file for your subrogation claim directly, or if the employee has to file action against the manufacturer and you can follow behind them.

Many jurisdictions have very particular laws on how to pursue subro, and who can take action.  Oftentimes the insurance carrier has to wait to file subro on their own, sometimes up to a handful of years post injury.  The way carriers get around this is to get the employee to file, and then the carrier piggybacks on their claim by adding themselves in to the suit.  Generally, any settlement proceeds that come later on will be split between the employee, the carrier, and the Counsel involved.  Recovery will likely only come once the worker is at MMI, so all costs for wage loss and medical expense are accounted for and a final number for exposure is arrived at.

 

 

Weigh the costs versus the outcome.

If the claim is not too severe, you have to figure out if it is worth the cost and expense to actually pursue a subro claim.  If we are talking about a medium-level laceration and a little time off of work, chances are that it will cost more to pursue subro versus just paying the cost and getting the worker back to work.  But just because the claim is minor doesn’t mean the carrier can’t put the manufacturer on notice and see if they can work out a little deal of their own, if applicable in that jurisdiction.  However many legal issues lie in wait, and these are the costs to determine if it is worth the time and effort or not.  Every state will be different, so do your homework.

 

 

Ultimately, machine manufacturers have a duty to engineer and create machines that are safe for occupational use.  Even though a worker may have made an operating error that does not protect the manufacturer 100% of the time.  Why was the machine able to be operated without a guard?  Why does the machine not turn off should material jam and make the machine inoperable?  Why did this injury happen and what steps could have been taken to prevent an injury like this from occurring in the first place?

 

 

Subro claims are confusing, costly, and require a lot of hours to work up to be successful.  You have to be on the ball from the very start, and adjusters have to gather a ton of information in order to even have a chance at being successful.  So identify your subro avenue, complete the investigation, get your counsel to direct you, and make your choices from there.  I would rather properly rule subrogation out from a global standpoint versus seeing an adjuster rule it out on their own just by saying the operator made an error in judgment.

 

 

 

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  http://reduceyourworkerscomp.com/about/.  Contact: mstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

SALES TO PAY FOR ACCIDENTS CALCULATOR:  http://reduceyourworkerscomp.com/sales-to-pay-for-accidents-calculator/

MODIFIED DUTY CALCULATOR:   http://reduceyourworkerscomp.com/transitional-duty-cost-calculators/

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

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

 

Do You Make Your Own Machines?

I have noticed a recent trend with preventable injury occurring with employers that make or modify their own machines. Luckily for them, these injuries have been somewhat minor—or at least not as bad as they could have been.

 

This led me to wonder, why would anyone make or modify their own machines? Doing so directly eliminates any subrogation chances, and thus a way to be reimbursed for monies spent on work comp claims due to machine design or malfunction. It is almost like shooting yourself in the foot, especially if you are self-insured since that money is coming right out of your own pocket.

 

Don’t get me wrong, I understand the positives for creating, fabricating, and modifying machines. Obviously there is a production need for whatever widget you are making. However if you were to look at it from the outside in, why would you create your own exposure?

 

Take a look at the following examples, and hopefully you will think twice about doing this on your own job floor:

 

 
Self-Manufactured Machine With Great Injury History

 

A company makes fasteners, about the size of a dime or quarter, for various business needs. They have many clients and many manufacturing needs for these fasteners. They created 4 machines, hydraulically ran and using air to assist the machine operation. An employee of 27 years, who is also a product engineer, was doing his normal job making prototypes for a client. There are no guards on the machine at all. By habit he put his hand in the pinch point of the machine between moving parts while leaning over to engage the machine. The end result was his hand being caught between the moving shaft and the target point. Luckily for him, he only sustained multiple fractures of two fingers on his non-dominant hand and about 20 sutures to sew him back up.

 

Upon investigation from the adjuster, the worker said he just had his hand in the wrong place at the wrong time. Even better, this was his first work comp injury after 20+ years using the same machine. On one hand (no pun intended) it is good that he went that long without injury, and that the injury was not much, much worse. On the other hand, there are no subro chances as the insured created the machine over 20+ years ago to meet their production needs.

 

The funny thing is that the machine was never updated, never looked at, and never modified within that 20-year range. You would think that maybe at some point in the 20 years someone would have looked at those machines and thought to get an outside opinion. But since they never created any issues they were never looked at. Of course, now they are fabricating guards for all 4 of the machines, and luckily for them this injury did not result in amputations or worse.

 

 
Food Manufacturer Sees Rash of Injuries on Production Line

 

Another example is a food manufacturer that created their production lines. Their product comes down in assembly-line formation, the workers grab stacks of product, place in boxes, and boxes are then placed in larger packaging boxes. It really was a great idea to create a wide-to-narrow funneling line which pushed more product quicker to the employee. Not only did it make product easier to grab, but it sped up the overall process. This was a recent modification, within the past couple years. Recently, a rash of lateral epicondylitis claims broke out. The employer could not figure out what the issue was until the carrier sent loss prevention people. What had happened was the rotating staff of workers included some that were of smaller stature than other employees, and they were newer hires. Instead of this work being at waist-to-chest level, the shorter workers were working at chest-to-neck levels. This created increased grasping needs, and the shorter workers were not using proper body mechanics.

 

Plus the new workers were not used to this fast-paced work environment, so it created a spike of claims in that particular line. The employer never considered making the line height adjustable or providing stools for shorter employees so they could be working at neutral height. These claims were not as severe, but had those new employees failed to report them timely, they would have required more extensive rehab including potential surgery and lost time away from work.

 

 

Avoid Making Your Own Machines, But At The Least Have a 3rd Party Review

 

The lesson here is to review your machinery and your production line modifications in your own shop. I recommend whenever possible not to create your own machines, as you eliminate your subrogation chances for future injuries. If you must create your own modifications, be sure to have an outside third party specialist review the machine and the modifications, and make corrections as advised. It will save you some injury headaches down the road.

 

 

 

 

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php

MODIFIED DUTY CALCULATOR:   http://www.LowerWC.com/transitional-duty-cost-calculator.php

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

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

 

 

Professional Development Resource

Learn How to Reduce Workers Comp Costs 20% to 50%"Workers Compensation Management Program: Reduce Costs 20% to 50%"
Lower your workers compensation expense by using the
guidebook from Advisen and the Workers Comp Resource Center.
Perfect for promotional distribution by brokers and agents!
Learn More

Please don't print this Website

Unnecessary printing not only means unnecessary cost of paper and inks, but also avoidable environmental impact on producing and shipping these supplies. Reducing printing can make a small but a significant impact.

Instead use the PDF download option, provided on the page you tried to print.

Powered by "Unprintable Blog" for Wordpress - www.greencp.de