How Workers’ Compensation Claims Can Kill a Business

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There I was, looking over three claims from the insurance company and my client in his Levi’s and freshly pressed shirt who was looking for what every businessperson seeks–logical cost-effective solutions to their business problems. In this case, it was one of three Workers’ Compensation claims that had occurred over 18 months.

My job was to interact on my client’s behalf to bring these cases to a close quickly and with optimum economic efficiency. Workers’ Comp rates were skyrocketing and the business community was in a fight for its economic life as it watched many likeminded business people fall by the wayside over a single cost, Workers’ Compensation Insurance.

The client, the owner of a small manufacturing company, was convinced his insurance company would not only act honorably, but move quickly to assist him in resolving his problem that they had created, once they understood the facts.

I argued that the meeting would not be productive, that his expectations were not going to be met. However, he convinced me that it was worth a shot. As an ex-cop, who after graduating from law school was now working with employers to resolve these types of problems, I had the same perspective as the times I had arrested a suspect five times for burglary, each time saying he would never do it again.

As you may have guessed, it was a short meeting. My client (let’s call him Harold) explained very carefully how the claims had been allowed to expand because the insurance company’s claims department had failed to monitor them. Further, he pointed out that they failed to investigate or respond to specific information he had provided on one case, which clearly indicated fraud.

He also pointed out that he had advised the insurance adjuster that his company had provisions for “modified duty” and that the carrier had failed to utilize that option, which ultimately cost him more money.

He then described how the most costly injury had actually been videotaped (by security cameras on the production floor) and how it clearly showed that the accident did not occur as the injured worker had reported. Although he had asked the claims department to have someone review the tape, it didn’t happen. After making a number of requests, he had sent the tape to the insurance company and confirmed that it had been received and that the case would be addressed. Five months passed and my client found out the videotape had not been viewed by the claims department, but a significant settlement was being offered.

After explaining all this to the claims department director and two other senior officials, Harold simply closed by saying, “You can see how this has done a lot of damage to my company. Because of all of this, my Workers’ Comp premium is going to double and I can’t afford that. My rate increase won’t stop there; it will go up even more the next year.”Page Break Line

The most senior claims official commented, “That is really none of our concern. How the outcome of your claims impacts your financial situation is not something we consider. We have certain rules and regulations we must follow and certain processes that we make sure are adhered to. There is really nothing we can do.”

It was interesting how the mindset of the three individuals from the insurance company was one and the same. They basically told Harold: too bad you are potentially going out of business; too bad that you, your family and, oh, yes, the 62 employees that work for you and their families are about to end up with nothing.

The expression on Harold’s face told the story: he was confused and angry, all at the same time. Twenty-three years of building a business (with his son, daughter and even granddaughter working in it) was summed up with one terse comment: “It’s really none of our concern.”

What happened that day, I had seen many times over with business owners like Harold, a man who had his office walls covered with awards, magazine and newspaper articles about all he had done with children’s programs, community support ventures, and major financial contributions to neighborhood centers. Now he was somehow not quite as important as a set of procedures that were specifically designed so the “professionals” would not be required to make individual decisions, but to provide them with a place to run to when someone asked them why they failed at their assigned tasks. The only words I had at that moment were these: “Meeting’s over.”

To make a long story short, our investigative team prepared a fraud case and took it directly to the District Attorney. After a few weeks, an arrest warrant was issued and the claimant was arrested. Then, our medical evaluators prepared a list of questions as to specific treatment issues for the insurance company’s claims department. Faced with detailed questions, it quickly rolled back many of the medical costs.

Ultimately, a new statistical report was issued reflecting a significant reduction in claims costs and reducing the financial impact on Harold’s company. In that process, he replaced his insurance broker and changed carriers and is working to join a captive insurance group.

Harold is not the exception; Harold is the rule. How someone can make a small bruise into a major medical case, taking months or even years to resolve and costing tens of thousands of dollars makes a statement about the system and the individuals who operate within it, not the person making the claim.

Notice that I said individuals who operate within the system, not individuals who run the system. After years of working with such cases, it is clear to me that the system runs the alleged operators and participants, be they doctors, lawyers, claims adjusters or insurance underwriters. It’s another case of the tail wagging the dog.

It’s simply that the system is set on a foundation of processes and the individuals adhere to those processes with what at times seems to be a religious fervor. No one is allowed to disrupt the process, including which form comes first, which step is next according to the handbook, and if a step is missed, we must go back and either start over, or at a minimum, move back to the point where we failed to adhere to the process.

Hard working and self-reliant entrepreneurs don’t understand such thinking since they are driven by objectives. Set a goal and achieve a goal is the businessperson’s task. How you get there is secondary, making sure you get there is everything. This is not just “a different perspective,” it is a different culture, a different ethic and even a different language.

I see the language difference every day. When claims adjusters “deny” claims, they are simply postponing the next action, most because they have too many cases and are trying to buy time. They deny a claim and then schedule medical appointments. They deny a claim and then post major reserves. They deny a claim and then settle it for $30,000.

When entrepreneurs deny you something, they do everything possible to make sure you get absolutely, positively nothing. It’s a different perspective and different language, which means that the process-driven person, who speaks in verbiage that floats and never really anchors itself anywhere, is really not in a position to speak to the objective-driven person.

When I’m asked where the problem lies, I simply point out the extent to which each side sees the world differently. Unfortunately, the business side that fills the trough with the funds that fuel it all finds itself put in the position of chasing down answers and having to take costly and extraordinary steps so that process-oriented bureaucracies will react in ways that don’t ultimately choke them to death.

At this point you may be disappointed that that I haven’t set forth a clear, simple, guaranteed solution to this difficult issue. Without any apology, I have only one answer: Don’t lie down and take it–fight!

If this is important to you, fight for the appropriate recognition as the entity that pays everyone in the system. Fight to be heard as our ideas do make a difference with your own Workers’ Comp claims. Mostly, fight to interject your objective-driven perspective into a costly and antiquated process-oriented system. Msw Bug Web

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