Curb Workers Comp Claims Costs

Although claims reviews generally focus on the lowest possible payout and cost-effective results, in my experience as an underwriter and broker, the effectiveness of the claims handling process receives too little attention. The overriding concern should be handling the claim as effectively as possible to reduce expenses and the final payout.

We see warning signs of inappropriate claims handling. For example, the fact that an estimated 20% of claims are fraudulent means that the adjusting diary should reflect an inquiry, fact finding, and an investigation of witnesses and/or the claimant. It’s no surprise to learn that case management reviews are being conducted on non-compensable claims — a protocol problem that can add 15%-20% to the total payout of the claim.

An effective operational schedule can curb the maximum possible cost of a claim to a maximum probable cost through file creation and production activities to control reserve estimates and claim payouts. Although these procedures seem obvious, too few adjusters are using them (these guidelines will vary depending on state Workers Compensation statutes and regulations):

1. Avoid filing a petition for a formal hearing by the claimant.

• Make sure that claims are reported to carriers according to law. Review the accident reports and witnesses’ statements.

• If the claim is compensable, ask the carrier to make voluntary payments in a timely fashion.

• If the claim is non-compensable or fraudulent, request that the carrier deny benefits.

1. Once the petition is filed, review it for completeness and accuracy. If the petition is incomplete or inaccurate, state laws provide for a 15%-25% penalty reduction of attorney’s fees.

    

2. Check the state statute of limitations as it applies to:

 

• Filing a claim for benefits

   

• Filing a petition

   

• Closing claims files on non-litigated claims

1. Because any wages or earnings the claimant is receiving will diminish their weekly compensation, review their current work status for concurrent employment. If necessary, request a re-examination by the state Rehabilitation Commission.
2. Check for Second Injury Fund Relief, which is available to claimants classified as permanently disabled due to a permanent injury on a previous job. In these cases, the employer doesn’t have to pay for the original injury, thus improving their Comp credit status.

    

3. Check compensation payments for a death claim.

• Determine eligible dependents and the compensation rate provided by state law. Payments cease when a child reaches age 18, or age 21-23 if they’re full-time students or if the widow remarries. Monitor any subsequent overpayments for over-reserving.
• Check claim offsets to determine if Social Security or state credits can be applied: Review any offsets to compensation benefits by Federal survivor or disability benefits, black lung benefits, or disability pension benefits. Investigate other disability benefits (state or contractual).

1. Review the claim for possible subrogation. If any third-party liability is found, determine which party (employee, employer or carrier) can file a lien under state law. Once the third-party suit is settled, make sure that the carrier is reimbursed for any overpayments.
2. Ask the adjuster to pursue dismissals, compromised settlements, and lump sum settlements to speed litigation and close the claims file.
3. Determine if a Claimant’s rejection of Simple Medical and Surgical Treatment is non-compensable by your state’s statute (provides for modification to compensation award).

    

4. Review medical bills and charges:

 

• Verify whether charges for treatment are appropriate for the injury.

 

• Review the mode of treatment to determine if appropriate for injury.

   

• Avoid requesting case management if unwarranted.

1. Make sure that the time period for payment of indemnity benefits, as per state statute, has been followed.
2. Review the claim to determine if an exception under the state’s Workers Compensation benefits applies.
3. Calculate the carrier’s reserve estimate challenging of carrier’s reserves:

 

• Check the claimant’s Average Weekly Wage (AWW)

   

• Check the scheduled percentage applied to the AWW

   

• Review the estimated medical treatment schedule

   

• Check applicable IME results

   

  • Date of Maximum Medical Improvement

     

  • Percentage rate for Temporary Partial Disability

     

  • Percentage rate for Permanent Partial Disability