Quite Possibily The Worst Workers Comp Claim Handling Ever


Candidate for the Worst Claim Handling Ever


A leading candidate for the worst claim handling everturned up in a workers compensation claim file audit.  A third party administrator (TPA) was handling claims for a statewide government self-insurance pool. And yes, all of the following mistakes were on one file!





The TPA adjuster, upon receiving the claim, went to verify coverage.   The coverage had expired twelve days before the claim was reported. The date of loss was five days after the coverage expired. The adjuster wrote in the file notes that he would confirm coverage before making any payments.” However, before the adjuster had done so, the TPA switched adjusters and the coverage question was forgotten.


Mistake #1. Handling the claim before coverage was verified.



The lack of coverage wasn’t addressed again until the pool’s executive director contacted the adjuster over a year later. By then over $65,000 had been paid on medical and indemnity by the TPA from the pool’s trust fund. There was no coverage but the pool was in an estoppel situation, so the TPA continued to cover the claim.


Mistake #2. The second adjuster not reading the first adjuster’s file notes.(WCx)






Best Practices for a TPA include making contact with the employer, the employee and the medical provider within 24 hours. The TPA had overloaded its workers comp adjusters with over 200 files each. The government pool’s contract did not contain any provision for the maximum number of claims to be assigned to an adjuster.   The second adjuster on the file never even saw the claim during the first three months it was assigned.


Mistake #3. Not reviewing the file when it was assigned.


Mistake #4. Timely contacts with the involved parties were not made.


Self Insured Mistake: Not having a contract stipulation on how many files could be assigned to one adjuster. 






Since the second adjuster never contacted the insured, the claimant or the medical provider, there was no investigation of the claim. The Employer’s First Report of Injury reflected that “the employee (a painter) hurt her lower back when she tried to move a five-gallon bucket of paint.”


Mistake #5. No investigation of the claim.



Medical Handling


File note entries read “Received medical bill” or “Paid medical bill” with the name of the medical provider and the bill amount. One medical report summarized in the file notes stated, “employee continues to work with her low back pain and wrist pain.”   Three months into the claim a medical report stated “will need to do bilateral CTS (carpal tunnel syndrome) surgery.”


Mistake#6.  Not comparing medical reports with the reported injury on the claim.



The employee was an obese woman with diabetes – two factors that can bring on CTS without an injury. Even though the claim was reported as a back injury, at no time did the adjuster question the carpal tunnel syndrome treatment.


Mistake #7. Failure to separate a covered injury from other medical conditions of the employee.


Mistake #. Lack of medical knowledge that CTS is not always injury related.


Mistake #9. Failure to get a medical termination based on whether the CTS was work related. If it was it should have been handled as a separate claim.



Indemnity Handling


The first contact with the employee occurred over four months into the claim when the employee called the adjuster inquiring about when she would be paid for her Temporary Total Disability, as she was off work due to the right wrist Carpal Tunnel Syndrome surgery (the left wrist would be done a couple months later). The adjuster did not follow up on the Temporary Total Disability question and got another phone call from the employee. The first contact with the employer occurred almost five months into the claim when the adjuster asked the employer for a wage statement.


Mistake #10. No on-going contacts with the employee and the employer.


Mistake #11. Not obtaining the wage statement from the employer when it was first noted the employee was going to need CTS surgery.



The adjuster put the temporary total disability (TTD) checks on autopilot and forgot about them. After about six months, the employee returned to work. As the adjuster had not been in contact with the employee or the employer, the Temporary Total Disability checks just kept on going out. The adjuster did not know the employee was back to work until receiving medical reports stating that the employee was at maximum medical improvement on her wrists and had been given a 15% impairment rating for both wrists combined. The employee received an extra eight weeks of Temporary Total Disability after she was back at work. The adjuster stated in the claim file notes that the overpayment of Temporary Total Disability would be taken out of the permanent partial disability (PPD) settlement. However, it never was recovered.


Mistake #12.Not making any effort to get the employee back to work earlier or to return to work on light duty.


Mistake #13. Putting Temporary Total Disability checks on long-term automatic issue. (WCx)



Remember the low back pain?


The employee had only been back to work for two months when the adjuster contacted her about the overpayment of Temporary Total Disability and settlement of the Permanent Partial Disability claim. The employee advised the adjuster that her back still hurt and she needed to go to the doctor.   The doctor ordered an MRI of the low back. The employee had a herniated disc at L4-L5 and a partially herniated disc at L5-S1. The doctor scheduled surgery for the employee.


Mistake #15. Not having inquired about the lack of medical treatment on the low back for almost a year.



The adjusterfinally paying attention, refused to approve the surgery until an independent medical evaluation (IME) could be completed. The IME confirmed the need for the surgery. After the surgery, the employee was off work for another seven months before the doctor placed her at maximum medical improvement with a 25% rating.    


Mistake #16. Not making any effort to get the employee back to work earlier or to return to work on light duty.





The adjuster contacted the employee with an offer to settle both of her Permanent Partial Disability ratings based on her being 40% disabled. The employee argued that she should be considered 100% disabled as she was not able to go back to her job as a painter. The adjuster refused to consider the claimant as having permanent total disability (PTD). A week later, the adjuster received a letter of representation from the employee’s new attorney, who claimed the employee was PTD. The attorney requested an administrative law judge (ALJ) hearing. The ALJ reviewed all the medical records and agreed with the adjuster’s defense attorney. The employee’s attorney appealed. The Workers Comp Board (WCB) agreed with the defense attorney. The adjuster paid the 40% PPD rating.



Worsening of Condition


A year later the employee’s attorney contacted the claims office, but the second adjuster was no longer with the TPA. A third adjuster on the claim learned that the attorney filed a request for the WCB to consider a “worsening of condition.”



Index Search


The new (third) adjuster looks over the file and realized that an ISO Index had never been filed on the claim. Once the index was filed, it was discovered that the employee had a prior back injury claim eight years before this claim. The employee was represented by the same attorney for both claims. The prior insurance company already classified the employee as 10% Permanant Partial Disability for a non-operated herniated disc. The prior medical reports showed that the employee’s earlier claim was for an L4-L5 herniated disc – the same injury the claimant had surgery for in this claim.


Mistake #17. Failure to index the claimant resulted in the TPA/pool paying for a claim that should have never been paid.



Exacerbation vs. New Claim


It was now obvious that the present injury was not a new claim, but the exacerbation of an old claim. If the index had been done when the claim first was received, it could have been referred back to the prior insurance carrier. The defense attorney requested that the ALJ transfer the claim back to the original insurance company. This is after the TPA had already paid the employee a 40% award (15% wrist and 25% back) on top of the 10% award the employee had received for the earlier claim.


The ALJ stated that as the TPA had already accepted the injury as a new claim, it would not change it now. The WCB appeal was denied, so the current insurer was stuck paying for the claim although it was an exacerbation of a preexisting injury.



Back to the Medical


The employee’s disk fusion surgery had failed. The treating doctor recommended another surgery. The third adjuster was too inexperienced to be handling this type of claim.


Self Insured Mistake. Not having a stipulation in the contract requiring experienced adjusters to handle claims -especially high dollar ones.



The adjuster asked her supervisor what to do. The supervisor said to get another IME. The IME stated that the fusion had partially failed, but absolutely did not recommend another surgery.





The attorney gave the third adjuster a sad tale of how much pain the employee was in, that the employee’s marriage was falling apart due to her pain and she was desperate to have the surgery. The attorney played on the adjuster’s sympathy until the adjuster agreed to the surgery.


Mistake #18.  Allowing emotions instead of medical facts to make the determination on how to proceed on a claim.



The adjuster should have had denied the additional surgery and forced the employee’s attorney to have the ALJ or even the WCB make the determination.



Permanent Total Disability Granted


Following the second surgery, the employee’s attorney filed a petition for PTD.   The treating physician had given the employee a total 75% Permanent Partial Disability rating based on the bilateral CTS surgeries and the two back surgeries. The defense attorney arranged another IME and got a similar rating of 65% total. The ALJ looked at the total medical history and the employee’s 65% or 75% permanent partial disability rating following her two wrist surgeries and her two back surgeries. The ALJ gave the employee a PTD finding. The defense attorney appealed to the WCB.   The WCB agreed with the ALJ and the third adjuster paid the employee another 50% rating. (WCx)





The failure to do the simple things in the claim file handling resulted in the self-insured pool paying out over a half million dollars in medical, indemnity and legal expenses. Verification of coverage would have stopped this claim before any dollars were spent. A proper investigation at the start of the claim, including an index of the employee, would have shown that the low back claim was an exacerbation of a prior injury and would have eliminated that portion of the claim. The review of the medical reports would have resulted in a denial of the CTS or at least had it treated as a separate claim. Non-compliance with Best Practices changed what should have been zero dollars paid into a PTD claim.



Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%Contact: RShafer@ReduceYourWorkersComp.com.


Editor Michael B. Stack, CPA, Director of Operations, 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.



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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.


©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact us at: Info@ReduceYourWorkersComp.com.


Telling the Difference Between Medical Management and Utilization Review

For the employee or the employer unfamiliar with workers compensation terminology, the terms medical management and utilization review sound similar. An employee should be accustomed to workers compensation terminology in case of injury and to understand the medical treatment process. The differences between medical management and utilization review should be understood by the employee and the employer alike. While both medical management and utilization review involve the use of a nurse, the two areas are quite different.



Medical management is the coordinating and planning of medical care provided to expedite the  employee’s return to work or to help the employee maximize medical improvement. Medical management is normally the responsibility of the nurse case manager (NCM). (WCxKit)



Utilization review is the evaluation of medical care being provided to the employee to determine the medical necessity and appropriateness of medical treatment being provided for an injury. The utilization review is conducted by a registered nurse (RN) who has a utilization review physician available for a medical opinion should the nurse be unsure of medical treatment.



8 Responsibilities of the NCM Involved in the Workers Compensation Claim

  1. Facilitating the medical rehabilitation of the injured employee.
  2. Coordinating the medical care between different providers to achieve the best possible results in a cost-effective manner.
  3. Consultation with the medical provider to determine the best treatment plan for the injured employee.
  4. Act as a liaison and facilitating the communication between employer, employee, and insurance adjuster.
  5. Monitoring the employee’s medical progress.
  6. Assisting the employer in identifying the return to work options.
  7. Coordinating the employee’s return to work, whether full or modified duty, with the employer, the employee, and the medical provider.
  8. Insure utilization review is brought in on all medical care and/or medical services when appropriate

Note: not all NCM is alike – look for providers who use licensed RNs and are URAC Certified. Determine how much clinical experience the NCM’s have — good ones have 3 years minimum clinical experience and 15 years average clinical experience. Senior Nurse Reviewers (SNR) are a higher level of NCM that provides medical oversight on the file the whole way through.  The SNR sees the Triage File, Treater File, 3-point contact, and Duration Guidelines.


4 Types of Utilization Reviews Used by the Nurse Involved in the Workers Compensation Claim


  1. Pre-certification reviews occur prior to the medical care being provided. The RN collects all the necessary information including the symptoms, diagnosis, results of tests, and the reasons the physician is requesting the medical service. The RN compares the information against the normal criteria for treating a specific type of injury. If the medical care is deemed necessary, it is approved. If the medical service is not necessary, the utilization review physician is asked to verify the denial of the service requested is correct. Nurses use medical guidelines such as MDGuideines which tell the appropriate length of time out of work or disability for any given injury, co-morbidity and even zipcode. Good TPAs have these guidelines at their fingertips.
  2. Concurrent reviews occur during the time medical treatment or service is being provided. This can be either for a patient in the hospital or for on-going outpatient care. The RN follows the same approach with the concurrent review as followed in the pre-certification review.
  3. Retrospective reviews occur after the medical service has been provided for either an in-patient or out-patient service. The RN again follows the same criteria as with a pre-certification review.
  4. Re-reviews occur when the pre-certification review, concurrent review, or retrospective review result in medical care or medical payments being denied. When a re-review is requested, the utilization review physician will go over all the information to determine if the prior decision was or was not  correct. (WCxKit)


Utilization Review provides an objective opinion as well as a client liaison, to ensure the right treatment is received at the right time based on evidence-based medicine. The review considers medical necessity and sometimes causal relationship to the injury, not cost.



It is in the employers and the insurers best interest to provide both medical management and utilization review on any indemnity claim or enhanced medical only claim. By combining medical management with utilization review, the employee receives the best medical care at the optimum cost. This has a positive impact on the employer’s future workers compensation premiums and builds employee loyalty as the employee feels he or she is given the best possible medical care, a win-win situation for all. It can be very effective to use Nurse Triage at the time of injury, Senior Nurse Reviewer throughout the life of the claim and Utilization Review


Note: All utilization review and medical management providers should be URAC Certified. This rigorous credentialing process has separate categories of for Utilization Review and Nurse Case Management. Your providers should be certified in both areas if they are providing both services. ASK THEM.

Author Rebecca Shafer
, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website 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. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com.




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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.


©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.


Know Four Types of Workers Compensation Adjusters

Carriers have classes of adjusters usually correlating with each adjuster’s amount of experience. Although class names vary, they are usually divided into medical-only, lost time/Indemnity, litigation, and catastrophic adjusters.
1 – Medical-only adjusters
Medical-only adjusters, an entry level position, are trainees with little to no experience. They handle minor medical claims involving simple lacerations and minor strains/sprains not involving any lost wages or complicated medical injuries/conditions. When an employee has a few clinic visits the employer sends the claim in with the bills and the adjuster sets up the claim, processes the bills, and closes the claim.
Medical-only adjusters conduct the initial interview with the employer and the employee. The interview itself does not go into great detail or investigation as the injuries are usually minor with uncomplicated outcomes.
When claims are time limited (60 to 90 days) and the claimant continues to receive medical treatment, the claim may be transferred to the lost time adjuster. Look upon extended claims as a “red flag” indicating a possible reason the employee is not returning to transitional or full duty work. Sometimes Lost Time adjusters handle medical-only claims, especially when they are "enhanced situations" where there is a complexity such as ongoing medical expenses.
2 – Lost time/indemnity adjuster
Lost-time/indemnity adjusters are more experienced, with knowledge of local legal statutes and a high degree of medical training in handling occupational claims. Their expertise is with claims running past 90 days involving more severe injuries such as a complicated lacerations, level 2/3 sprain/strains, surgical repairs, or pending surgeries. When employers question claim compensability, the claim is immediately assigned to the lost time/indemnity adjuster.
The adjuster takes a recorded, detailed statement, and interviews the employee and any witnesses to the injury. Sometimes a visit to the premises is needed to investigate certain claims. (WCxKit)
Claims are handled until the claimant is either released from care, or the claim goes into dispute. These claims may remain with the adjuster for months or even years.
3 – Litigation adjuster
Litigation adjusters handle claims involving lawsuits. These adjusters share the same level of experience as the lost-time adjuster. However, they have advanced training in legal issues and in investigating the compensability of occupational claims.
When a compensable claim is disputed, and the claimant retains counsel and files a Notice for a Hearing, the claim goes from the lost-time adjuster to the litigation adjuster. The litigation adjuster works with in-house or outside counsel gathering details on the injury, and appears for hearings and mediations to quickly resolve the claim at minimum legal expense.
The litigation adjuster usually cannot speak directly to a claimant due to the retainer of plaintiff counsel. Therefore, the adjuster relies heavily on the employer’s investigation and facts of injury, if known, and works on gathering medical records, witness statements, police records, prior plaintiff litigation history, and any other facts about the claim, gathering evidence to use in defending the claim. The claim is handled through settlement or trial and then closed.
4 – Catastrophic adjuster
This level of adjuster is the most complex, handling very difficult claims, usually ones where the claimant has a severe injury requiring multiple surgeries, amputations, loss of sight, hearing loss, or internal medical issues such as asbestosis or chronic joint degeneration due to occupational exposure, etc. Employers hope for few of these type claims, but it is a bullet that cannot be dodged forever.
General/catastrophic adjusters have many years of experience in the Insurance industry, combined with advanced medical and litigation training and experience. They also have advanced claim investigation training, and may possess a law degree or are licensed attorneys. They delve very deeply into the complexities of the claim in an attempt to resolve all issues of medical treatment expense and ongoing incurred wage loss. Sometimes they suggest large settlements or annuities to avoid ongoing claim costs for life or advanced vocational retraining, a very expensive proposition lacking a guaranteed positive outcome.
These types of serious claims may last for years, and sometimes involve vocational retraining and job placement for the claimant when the sustained injury is so severe return to work is impossible.
Carriers typically have four levels of adjusters, ranging from the newly appointed claims trainee to the severe/catastrophic claims veteran. The important thing for the employer to know is in the event of a severe claim, your carrier retains the proper adjuster to handle all aspects of the claim in order to protect your best interests.

Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website 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. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

5 Frequently Asked Questions about Payment of Indemnity Benefits

1.     Q: When and how long can an employee collect indemnity benefits? 
 A:   As long as the employee is medically unable to work, with limitations in some states on the maximum number of weeks.
2.     Q:  The employee is in jail (not related to the workers comp claim), can s/he still collect indemnity benefits? 
 A:   It varies by jurisdiction, but in most cases if the employee can still receive the necessary medical treatment to recover from his injury, he can still collect benefits while in jail until he is medically able to return to work. (WCxKit)
3.     Q:  The employee is taking his/her family on vacation, can s/he do that while drawing indemnity benefits? 
 A:   As long as the employee does not engage in any activity on vacation that will interfere with his medical recovery, and as long as the employee will not miss any medical appointments, then he can go on vacation in most jurisdictions.
4.     Q:   The employee is out of the country, can s/he still collect indemnity benefits?
 A:   If the employee is not treating for his/her medical condition, the workers comp adjuster should take the necessary steps to suspend temporary indemnity benefits until the employee returns to the country and resumes medical care. WCxKit If the employee has already reached maximum medical improvement, the permanent indemnity benefits would continue in most jurisdictions while the employee is out of the country.
5.     Q: The employee is working another job while collecting indemnity benefits from us, can s/he do that? 
 A:    No. If the employee is able to do similar work for another employer, s/he is no longer medically unable to work WCxKit and temporary indemnity benefits should cease immediately. A possible exception to this would be for PPD benefits where the employee is unable to resume a manual labor position with your company, but locates less strenuous employment with another company. 

  \Author Rebecca Shafer, J.D., President, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing.  Contact: Info@ReduceYourWorkersComp.com  or 860-553-6604.  
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Do not use this information without independent verification. ALL STATE LAWS VARY AND CHANGE; consult with your insurance broker or agent about specific workers' comp issues.
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact

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