The Great Debate, Does Employer or Employee Benefit More From Worker Comp

 

Who Benefits More – Employer or Employee?
 
Every year a debate in work comp crops up about whether or not employers derive a benefit from the “exclusive remedy” – a principal that a worker gets no-fault comp, but loses the right to sue for negligence. The debate goes back and forth about who benefits more and seems to assume that the purpose of the exclusive remedy was to benefit the employer, the employee or both. [WCx]
 
 
Has More to Do with History than Who Benefits More
 
In fact, the true purpose has to do with darker underlying forces in the history of the Employers’ Liability laws which preceded comp. The best historian of the Employers’ Liability laws and the reason for their demise was Clarence W. Hobbs, the first head of NCCI and, in the late 1930s, the author of several books on the history of early work comp laws and the demise of Employers’ Liability.
 
 
Attorney Contingency Fees Main Trigger in History of Work Comp
 
The reason for the exclusive remedy was, as will soon be clear, lawyers and contingency fees. Contingency fees (no recovery, no fee) were only accepted grudgingly in US law because, it was correctly believed, that it gave the attorney every reason to exaggerate and manufacture disability.
 
The contingency fee, however, gave the large communities of recent immigrants, working in the most dangerous jobs, access to a lawyer which would have been impossible if they had to pay a fee, win or lose, up front.
 
However, the entire system of contingency fees contained to effective checks on abuse. Cases were openly solicited (read “manufactured”) by “runners”, local bilingual immigrants who fed potential clients to lawyers, for a set finder’s fee. Hobbs described both the runners and lawyers as “a noisome horde of ambulance chasers”. Soon, the courts agreed.
 
 
Courts Overcrowded with Ambulance Chasing Claims
 
The integrity and credibility of courts, judges, juries and verdicts was plunging and the courts themselves, previously rather staid, were becoming packed with mobs of litigants on Employers Liability negligence claims. Waiting in the wings as an alternative was one feature of European and British social law – Workmen’s (sic) Compensation. (The genderless “Worker’s” was a feature of the 1970s.)
 
 
Prime Mover to Work Comp was Civil Courts
 
The prime mover for the change from negligence to worker’s comp was the civil courts. Any benefit to worker or employer was an unintended consequence, although there was no shortage of volunteers to claim credit. In fact, both employer’s groups AND unions simultaneously boasted of their roles. [WCx]
 
Has anything really changed? Contingency fees, a fundamental fixture in work comp, were actually not intended to be part of comp, but they gradually crept back in because the US in the 1930s, alone in the world, assumed they had always been there and made sense.
 
Clarence W. Hobbs, however, strongly disagreed.
 
 
 

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

 

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.

Recent NY Workers Comp Decision Can Alter Attorney Practices

Burke v. Verizon Services Group, 2011 NY Slip Op 06613, 9/29/11 reaffirms that the Board’s informal rules regarding attorney fees are an error of law.
 
 
The issue was whether or not the Board could award an attorney fee where there was “no new money moving” but there was an award for money already paid. For decades, Board policy has been not to award fees unless new money is being awarded. The statute, however, (Sect 23, NY WCL) states that an approved fee is a lien on the award. The case held that it was error for the Board to refuse to approve a fee solely because money had already been paid prior to the making of the formal award at a hearing. (WCxKit)
 
 
The decision opens a broad range of possible fee opportunities for claimants’ lawyers. Until now, lawyers have been reluctant to take any claim where there might not be a possibility of new monetary payments even though the claim had many unresolved issues, principally medical treatment.
 
 
The Board, refusing to recognize that services solely related to medical treatment could warrant a fee, left thousands of claimants without counsel unless they were willing to lose time from work, which would result in a fee opportunity. That point of view seemed to indicate that the Board favored lost time more than medical treatment resulting in no lost time.
 
 
The Burke decision indicates that an attorney can request a fee, even if there will be no award of new money, and retain a lien until, eventually, new money will be paid in the future. Or, the fee can be paid as a lien on a current award, and deducted later from future payments. (WCxKit)
 
 
The decision seems to give attorneys a slight windfall but, upon further analysis, results in fewer attempts to magnify periods of disability and rates solely to produce fee opportunities.
 

Author Attorney Theodore Ronca is a practicing lawyer in Aqueboque,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.  Mr. Ronca has 21 years experience in searching and retrieving medical records and many other types of documents for defense workers Compensation claims. Contact Attorney Ronca at 631-722-2100 or medsearch7@optonline.net

 
Our WORKERS COMP BOOK:  www.WCManual.com
WORK COMP CALCULATOR:  www.LowerWC.com/calculator.php

 
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.

Eight Things Plaintiff Attorneys May Tell Your Employees

Plaintiff workers compensation attorneys will tell the general public their purpose is to assist the injured employee. However, plaintiff attorneys are in business to make a profit. If there is no money in it for the plaintiff attorney, their willingness to assist the injured employee vanishes. In order to earn service fees there must be some conflict between employer and employee.   If the employee does not have any issues with the employer, the employee is highly unlikely to hire an attorney (assuming the employee is not bringing the workers compensation claim for the purpose of self enrichment).

 

 

Plaintiff attorneys know that without issues between the employee and the employer, or between the employee and the employer’s insurance adjuster, they make no fees.  Therefore, it is incumbent on the plaintiff attorney to encourage conflict between the employer and the employee. Attorneys also understand employees may have feelings of loyality. To overcome the reluctance of many employees to have conflict with their employer, the plaintiff attorney’s approach with the employee is to emphasize the conflict and perceived wrong the employer or the adjuster has done. By driving a wedge between the employee and the employer, the plaintiff attorney can earn the service fee from the employee.(WCxKit)

 

 

Eight things plaintiff attorneys have been known to tell employees in an effort to create issues and conflicts and to sign up the employee as a new client are as follows:

 

 

  1. The insurance company has a team of lawyers on its side; you need someone to protect your interest. The reality is the workers compensation adjuster almost never hires an attorney for a workers compensation claim unless the employee has obtained an attorney. Even then, the work comp adjuster will not hire a defense attorney unless the plaintiff attorney files a motion for a hearing or trial.

 

 

  1. Attorney’s tell clients they take a tremendous risk if they don’t have an attorney “protecting their rights” or “by your side” or “on your claim” or “guiding you through the complicated process with skillful representation” or “you won’t receive fair compensation without an attorney.” In truth, the workers compensation statutes of every state have clear cut guidance to the insurance companies on how they must handle claims. All states require all reasonable and necessary medical expenses to be paid. All states define exactly how temporary total disability indemnity benefits will be calculated and paid. All states define how permanent partial and total disability will be calculated and paid. All states define how death benefits and vocational rehabilitation will be handled.

 

 

  1. Attorneys tell clients “we don’t charge a service fee unless we collect benefits for you.” What is notsaid, is they will not accept the employee as a client if they do not think the employee has a valid workers compensation claim. The plaintiff attorneys also do not emphasize that the service fee comes out of the money the employee would collect anyway for temporary total disability or permanent partial disability or permanent total disability.

 

 

  1. Attorneys say, “We believe that quality representation is a basic right and should be available to everyone, not just the wealthy.” When plaintiff attorneys take this approach, they are playing to the employee’s feelings of being treated unequally by the “big, bad insurance company”. A skilled workers compensation adjuster who contacts the employee promptly, answers all the employee’s questions completely and accurately, and makes sure the employee is obtaining all medical care needed, will prevent this plaintiff’ attorney’s approach to creating a feeling of conflict.

 

 

  1. Plaintiff attorneys say that the workers compensation system is complicated, difficult to understand and can be overwhelming. Here, attorneys are able to play on the employee’s fear of the unknown. Of course, for their service fee, they will guide the employee through the state workers compensation statutes. The sad part is often the employee does not need their guidance, as the state statutes mandate what the employer and/or the insurance company adjuster can and can not do on the work comp claim.

 

 

  1. Attorneys say the insurance company will deny you the benefits you are entitled to if you have a big claim. The size of the claim has nothing to do with the payment of benefits. The insurance company must pay the benefits mandated by state work comp statutes. The only claims for denied benefits are those where the medical documentation does not justify what is being claimed, whether it is additional medical care or additional indemnity benefits.

 

 

  1. They tell potential clients insurance company adjustersoperate illegally or act maliciously under the assumption that most employees pursuing workers compensation claims are malingerers or frauds.In real life, the large majority of workers compensation claims are routinely handled by the adjuster. The adjuster pays the temporary total disability benefits until the employee is back at work and pays the medical benefits until the employee no longer needs medical care. The only claims the adjuster ever considers the employee malingering is when the employee is taking longer to recover than normal and the medical information provided does not justify the delayed recovery. As for fraud, unfortunately there are some employees who will attempt to take advantage of the workers compensation system and when the adjuster sees a highly questionable claim, the adjuster should check its appropriateness.

 

 

  1. They say that employers encourage the insurance company to deny your claim so they can keep their workers compensation insurance premium down. If the employer has information that a work comp claim is bogus or fraudulent, the employer should advise the adjuster so the appropriate investigation can be completed and a case built to justify the denial of compensability of the bogus or fraudulent claim. If an employer was to tell the adjuster to deny a valid claim, the underwriter of the insurance company would be notified and the employer would be facing cancellation. The employer would probably have higher insurance premiums from the next insurance company who picks up the employer for work comp insurance coverage.

 

 

There are some valid reasons an employee will obtain an attorney. If the employer or adjuster is non-responsive to the employee when the accident occurs, or during the course of the medical recovery, often the employee will get an attorney because they don’t know what to do and have not received the guidance they need from either the employer or the adjuster. If the medical provider is unresponsive to the employee’s concerns about their medical care, and the adjuster is also unresponsive to the employees concerns about their medical care, the employee will often obtain an attorney, and they should. (WCxKit)  If the employer promotes a caring atmosphere and is responsive to injured employees, the employees will have no reason to hire an attorney. Once an employee hires and attorney, the cost to settle the claim will increas.

 

 

There are also the unsavory reasons an employee will obtain an attorney such as a desire to “milk the system,” to have an extended stay off work, and to “hit the work comp lotto.” There is little the employer or the adjuster can do to stop the employee who has a desire to “get something for nothing” by obtaining an attorney. However, as the large majority of employees are ethical and honest, their claims can be kept out of the hands of the plaintiff’s attorneys by the proper handling of their claim by the employer and the adjuster.

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 or 860-553-6604.
 

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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.

 

Attorney Fired Late in the Case Entitled to Quantum Meruit Recovery of Fee

 
An attorney represented the client from September 2007 through May 16, 2008, when the employer/workers compensation carrier offered $ 7,500 to resolve the case. Before the offer was accepted, the client discharged the attorney and hired a new attorney.
 
 
Three days later, the new attorney settled the case for $ 10,000. The JCC denied the attorneys entitlement to fees under a quantum meruit theory, concluding that because the attorney did not "secure" any benefits, no fees were due under § 440.34(4), Fla. Stat. (2003). (WCxKit)
 
 
The appellate court held that although the new statute limited the amount of attorneys fees that could be paid based on the amount of benefits secured, it did not, either expressly or by implication, suggest that the Legislature intended to abolish a discharged attorneys right to obtain an equitable quantum meruit share of the recovery by way of a charging lien. 
 
 
The court remanded the case to the JCC to make the appropriate determination as to whether the attorney was entitled to a quantum meruit charging lien and the appropriate amount. [See Rosenthal, Levy & Simon, P.A. v. Scott, 17 So. 3d 872, 2009 Fla. App. LEXIS 13672 (Fla. 1st DCA 2009); see Larson's Workers Compensation Law Ch. 133, § 133.03 [5] n41  
 
 
Copyright 2011 LexisNexis. All rights reserved. This material is excerpted from Larson’s Workers Compensation Law. Reprinted with permission.
 
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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 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.

Legal Cost Containment in Workers Comp Litigation

Barb Galluppi notes that once an attorney has entered the picture, you are now in a cost containment – reaction – mode. All is not lost, however. There are many things you can do to assure that litigation and indemnity costs are held to a minimum:

  1. Immediately forward the summons and complaint or application for adjustment of claim to the claim administrator. It is a good idea to both fax it and put the original in the mail.
  2. Work with the adjuster to formulate a defense plan of action (POA*).
  3. Request a defense budget and estimate of expenses UP FRONT.
  4. Avoid extraneous discovery. For example, if a deposition or expert analysis does not seem critical – resist having it assigned to an attorney.
  5. If it is a case to settle, and notice of attorney’s lien has recently been received, be sure to exhaust settlement avenues before referring out to defense counsel. Often a case can be settled early on, avoiding all defense costs.

To have Barb answer your questions, post them below in the comment box. If you would like to be notified of her responses, sign up for the RSS feed or email notification in the upper right hand corner of the blog. For more information about Barb’s services, click here: http://www.ajg.com/portal/server.pt?open=512&objID=462&PageID=53927&cached=true&mode=2&userID=21938

*Other abbreviations can be found at WC 101: http://www.reduceyourworkerscomp.com/workers-comp-abbreviations.php

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