Tag Archives: rebecca shafer

Stop Being Clueless About Workers’ Comp

Despite the brouhaha over the ProPublica articles that say companies are unfairly denying treatment to injured workers to save on costs, I still regard the high cost of workers’ compensation (for those companies that do have high costs) mostly as a management problem.

The companies I see — which are the ones that have huge problems — are clueless about workers’ comp. They turn their claims and injury process over to their claims administrator or carrier, hardly participating in the process, then they blame the TPA or carrier when costs go up even though they have done nothing internally to manage safety or injuries.

These companies never budget for workers’ comp management, don’t staff the risk department (if there even is a department) properly. THAT would cost money, and our headcount would increase, they say. Often, if they do have staff, they do not allow the staff to attend conferences or seminars, join organizations or purchase resources. THAT would cost money, they say.

Sometimes, their brokers offer to help by providing consulting resources, but the companies with high workers’ comp costs do not see the merit in such an approach. I worked with a major entertainment facility, speaking with them once per week, on behalf of their broker, hoping to gain insight. I offered to consult with the staff because I am a consultant: Getting to the root of the problem, finding the cost drivers and fixing them is what I do. They did not need a consultant. Then, one day I said I could “help them develop their training program,” and they accepted instantly! I had used the wrong word — they needed “training help” not “consulting help.” Within months, the high cost of their workers compensation program went down to almost zero. Problem solved.

Several things employers can do, but usually don’t, are:

1. Contact employees within a week or two after the injury to do a survey of their medical and claims adjuster experience. Speak to them via phone, just as you would ask a good customer about her experience. Jennifer Christian, chief medical officer at Webility, contacts employees to find out if each injured worker felt that care was poor, fair, good or excellent. Often, poor treatment by medical providers and callous indifference by adjusters causes employees to become angry, seek counsel or even delay recovery because of lack of expertise during the initial treatment experience.

2. Have claims reviewed periodically by an independent auditor with a medical provider on the team. Only an MD is qualified to read the medical reports to determine whether treatment was appropriate and sufficient, whether alternate causation has been considered and whether aggressive and excellent (yes, perhaps more expensive) treatment has been provided. Make sure adjusters are not using utilization review (UR) to deny care. Audit, audit, audit. Care, care, care.

Do weekly roundtables with your third-party administrator (TPA) — for instance, every Friday discuss 10 claims, etc. Don’t wait until claims reach $25,000. Discuss them when they are small, BEFORE they get astronomical.

3. Retain an MD to be part of your claims team. This can be an on-site MD part-time or full-time who also speaks with treating physicians and injured employees. Adjusters and nurses do not know “medicalese.” Applause to those insurers who have MDs on staff BUT employers still need to have their own medical advisers on the team. Employers often forget we are talking about medical injuries, not simply “claims.”

4. Assess the key cost drivers of your workers’ compensation costs. Nine out of 10 times, employers misdiagnose the cause of their high workers’ compensation costs. In one case, the employer was ready to fire the insurance company because “they thought” there was too much nurse case management. Upon more detailed analysis, including an independent review by claims experts and an MD, we found the claims were handled well 98% of the time. The cause of the problem was misidentified.

The REAL problem was a lack of a post-injury response — employees and supervisors did not have steps to follow within the first 24 hours after the injury. We then held 19 training sessions over three weeks to improve best practices related to rapid medical care and RTW/SAW (return to work/stay at work) in this mega-entertainment theme park. The workers’ compensation costs dropped 20% in a year-over-year comparison of total incurred losses with the previous 12-month period.

5. There are no tools to guide employees and supervisors. In the above case, we provided: employee brochure, physician brochure, wallet cards in English/Spanish for supervisors and employees, and other tools.

6. And, most importantly, provide the best quality medical care available. Yes, even if it’s more expensive. Pennywise is pound foolish. Get the best, not the cheapest. Pay the doctor more to spend more time with your injured employees, not less time.

7. Establish bundled pre-approval of care in account instructions so UR is not necessary — e.g., “All PTP (primary treating physician) treatments and as many as five visits to specialists are pre-authorized by insured. All testing requisitioned by PTP and specialists including physical therapy (PT) and MRIs is to be approved; do NOT submit to UR. If you strongly believe treatment or testing is unwarranted, contact the insured’s medical director before denying request.”

If you don’t manage and monitor it, the process (any process, not only workers’ compensation) will not work well.

It’s time for employers to become involved in their own business! The first step is assessing the problem at your company, not the industry in general or another company. Get that mirror out and have a look. You are most likely looking at the problem.

How to Manage Legal Fees for Work Comp

Loss expenses are on the rise, at an alarming rate, according to California’s Workers’ Compensation Insurance Rating Bureau (WCIRB). The California Workers Compensation — Aon Advisory Bulletin (July 2014) indicates that “allocated costs (mostly attorney payments) increased 7.3% in 2013. Unallocated costs increased 10.3%.”

Given that legal costs are on the rise, here are nine ways that risk managers can more closely manage legal services:

Have in-house counsel monitor outside counsel (and adjuster performance). Litigation costs must be properly managed because overzealous defense counsel and untrained (or cooperating adjusters) can prolong litigation, increase costs for the employer and wreak havoc on the lives of injured workers.

Review outside counsel financial arrangements — consider capped fees, flat fees or invoice paid upon file completion. Paying at the end allows outside counsel to defend the claim but discourages unnecessary hearings and runaway fees and lets risk management easily review the ultimate fee rather than numerous monthly bills. Excessive fees are more noticeable and easier to compare against other files and law firms. Attorneys who are milking the claim become more visible.

An “invoice paid upon file completion” is a good approach if you use the same attorney frequently. However, this approach should not be used when the defense counsel only has one file. You could end up with an excessive bill, with little recourse other than to fight with your own chosen counsel over the amount.

Conduct an independent audit to assess whether defense counsel was needed in the first place, or whether she was just assigned the case to do work the adjuster, assigned too many cases, was too busy to do.

A favorite ploy of overworked adjusters (and lazy adjusters) is to allow the defense counsel to handle the claim. Legal counsel should not be paid to do the adjuster’s job, including gathering medical reports, state board records and ISO reports, arranging independent medical exams (IMEs), etc. An independent claims audit of your files will tell you whether you are paying legal fees for the work the adjuster should be doing.

Review hearing rulings. Review whether the same attorneys are requesting hearings on the same issue repeatedly or requesting hearings on issues they are likely to lose. For example, if benefits are terminated but reinstated at the hearing, and this happens repeatedly, it is an indication that benefits are being terminated without sufficient cause, thereby creating unnecessary legal expense. In insurance speak, this is called “churning” files.

Churning is any unnecessary activity undertaken by defense counsel for the sole purpose of increasing the legal services bill. It can be unnecessary research on a subject the attorney should know, unnecessary motions, unnecessary discovery, having another attorney in the firm review the case, having a paralegal or junior partner undertake an unnecessary action, etc.

Before any preparation by defense counsel for the hearing, the adjuster should phone the defense attorney and discuss the need for the hearing and what the probable outcome will be. If you know going into the hearing that you are going to lose, have counsel resolve the issue with the opposing counsel. It will save both legal fees and unnecessary claim costs (indemnity and medical costs continue while you wait for the hearing). By removing the unnecessary hearings, you move the file faster, with less overall claim cost, to the final resolution.

Review whether opportunities for agreement between counsel are ignored. Defense counsel may avoid agreement because it is more profitable to have a junior attorney attend hearings and collect a large fee.

For example, in Connecticut, a claimant’s doctor can be changed, with agreement of counsel, but defense counsel rarely agree even though knowledgeable counsel will know which doctors have reputations for overtreating and overrating disability, which doctors are known for unbiased treatment and ratings and which doctors have a reputation for being conservative in their treatment and ratings.

Review whether defense counsel makes unfounded accusations against claimant of misbehavior or wrongdoing (e.g. claimant is not credible or is trying to game the system) on every claim to obfuscate the issues and prolong the litigation.

If defense counsel is not totally objective in his assessment of both the claim and the claimant, it is time to immediately identify new defense counsel.

Look at whether the attorney charges for lots of research, on many files. Very little research is necessary except in unusual claims with issues of law, so files with legal research should be reviewed very carefully.

Adjusters — with sufficient authority — should attend all hearings with defense counsel. Sometimes, there are opportunities to settle litigation during hearings. These opportunities should be considered while someone with the requisite authority is present. In many cases, seasoned adjusters are capable of attending hearings without defense counsel. (This is not allowed in some jurisdictions.)

Risk managers (or the company human resources manager or the workers’ compensation coordinator) should attend all hearings to be available to testify about the job requirements and efforts to provide transitional duty and to show interest in the injured worker’s well-being. Specify this procedure in the account handling instructions.

To verify you are controlling your legal fees, a two-pronged approach is needed. A litigation management review by an independent claims auditor will determine the effectiveness of your adjusters in controlling legal expenses. This should be combined with an audit of the legal invoices by an experienced legal bill auditor.