Why to Use Alternative Dispute Resolution

ADR offers a new route for injured workers to receive care from reputable doctors and caregivers in an efficient, cost-effective way.

Cranes constructing buildings

During the pandemic, agents and brokers found themselves in the unenviable position of needing to find ways to reduce the soaring costs being incurred by their construction clients. While certain inflationary factors, such as the cost of supplies, were out of agents’ and brokers’ control, they could explore new options for workers’ compensation insurance. 

Workers’ compensation claims are one of the most inefficient and costly aspects of a construction project. According to Insureon, construction carries the highest workers' compensation costs of any industry. While construction presents more risk for workers than most other industries, there are also issues with the traditional workers’ compensation claim process that drive costs without yielding better results.

The solution may lie in supplementing the traditional workers’ compensation model with programs that focus on pre-established, high-quality care that is agreed on by both unions and construction managers well in advance of any workplace injury. Alternative dispute resolution (ADR) programs offer a new route for injured workers to receive care from reputable doctors and caregivers in an efficient and cost-effective way. 

See also: Building an Effective Risk Culture

What is an ADR Program?

ADR programs require an additional agreement between construction managers and union labor, with a program administrator acting as an impartial intermediary. The program sets up pre-established processes for care for injured workers. Because these agreements are formed in partnership between labor representatives and the construction business, a reserve of agreed-upon doctors and caregivers can be established in advance, ensuring injured workers are driven to reputable caregivers with a history of focusing on healing injured workers.

Requiring workers to see reputable caregivers helps guarantee workers do not prolong care in the hopes of a larger settlement payout; it also removes layers of bureaucracy and wait times that are taken up by debate and litigation in a traditional workers’ compensation model. 

ADR programs do not replace traditional workers’ compensation coverage. Rather, they function in parallel with traditional workers’ compensation plans. As ADR programs are formed between construction projects and unions, any injured non-union labor would need to follow the traditional workers’ compensation process for filing a claim.

A Focus on Care

The traditional workers’ compensation process is often bogged down by debate and perspective about which caregivers are more credible. This often leads to long delays and negotiation between injured workers and construction businesses, slowing care and increasing the costs associated with the claim without providing better care.

Under an ADR program, this problem is resolved long before a claim is filed. Directing care allows for workers to get the help and care they need much faster, while simultaneously ensuring care providers are approved and accepted by all parties. This not only allows for faster care but allows representatives from construction companies and union labor to have a greater degree of confidence in the caregivers with whom they work. As a result, workers in an ADR program have a higher-than-average chance of returning to work, while also providing notable cost savings for the construction business.

Working Closely With Unions

While the traditional workers’ compensation model requires agreement and cooperation with unions, it often calls for conversation and negation at the worst possible time – after an injury occurs.

ADR seeks to solve for timeliness by both determining a plan of care in advance and ensuring the caregivers meet all the requirements of both the project and the unions. This allows for unions to use doctors with whom they have a history, while allowing the construction company to verify that caregivers have a history of good patient results and a focus on healing.

See also: Managing New Age of Construction Risks

Less Bureaucracy Through a Program Administrator 

While ADR programs provide a direct and clearly defined path of care for those enrolled in the program, there remains a need for some degree of administration to ensure all aspects of the agreement are met. There must also be a protocol to handle any disagreements or negotiations between the unions and the construction companies. This level of management requires far less time than it takes for an injured worker to receive care in a traditional workers’ compensation model. It also ensures all parties remain satisfied and compliant with the terms of the agreement. 

As the costs of building continue to increase, those who insure the workers on job sites are facing pressure to drive costs down while simultaneously increasing return-to-work rates. The traditional workers’ compensation model simply is not built to meet that demand. Only through new measures, such as ADR programs, will the industry be able to keep up and improve the return-to-work rates on job sites.

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