Avoiding Litigation: What Can Employers, Insurers, and State Workers’ Compensation Agencies Do?

By Richard A. Victor, Bogdan Savych

July 1, 2010 Related Topics: Litigation and Dispute Resolution, System Overview

One goal of a workers’ compensation program is to deliver necessary medical care and income benefits to workers injured on the job without the uncertainty, delay, and expense of litigation. In many states, however, disputes and attorney involvement in the benefit delivery process are common.

Policy debates about attorney involvement have common themes from state to state. Workers’ attorneys argue that they help workers receive benefits that these workers would not be able to obtain themselves, help workers navigate a sometimes complex system, and protect workers from retaliation by the employer or insurer. Advocates for employers and insurers contend that attorneys are involved more often than necessary, that workers can often receive the benefits they are entitled to without representation, and that attorneys may even reduce the total amount of benefits that workers take home.

Some of the existing attorney involvement is inevitably unnecessary—for example, cases where the worker would have received the statutory entitlement without resorting to hiring an attorney. If unnecessary attorney involvement can be avoided, this would be a “win-win-win” scenario. Workers would receive benefits without the expense of paying an attorney and the delays of dispute resolution; employers and insurers would save the costs of defending the case; and increasingly resource-short state workers’ compensation agencies would have smaller caseloads to manage and would have to provide fewer dispute resolution services.

This study Avoiding Litigation: What Can Employers, Insurers, and State Workers’ Compensation Agencies Do? identifies and quantifies some of the more important factors that lead injured workers to seek representation by an attorney, providing some key take-aways for employers, claims organizations and state agencies.

Major Findings

The study found that workers were more likely to seek attorneys when they felt threatened. Several sources of those perceptions of threats were found in:

  • The employment relationship. Workers believed they would be fired as a result of the injury, and/or workers perceived that the supervisor did not think the injury was legitimate.
  • The claims process. The worker perceived that his or her claim had been denied, although it was later paid. This perception may have stemmed from a formal denial, delays in payment, or communications that the worker deemed to be a denial.

Potential Implications for Employers, Claims Organization, and State Agencies:

It is possible that attorney involvement can be decreased if employers, claims organizations, and state agencies reduce or eliminate unnecessary actions that workers interpret as threats. The suggested actions below, while logical implications of this study, are not themselves the findings of the empirical research. These include:

  • Train supervisors: Help supervisors create timely communications that focus on trust, job security, and entitlement to medical care and income benefits.
  • Create state agency education materials and help lines: Provide written materials and an accessible help line that answers workers’ questions to help ease feelings of vulnerability and uncertainty.
  • Communicate in a clear and timely fashion about the status of the claim: Prevent misunderstandings through unambiguous, timely communication from the claims manager so the worker does not mistakenly conclude that the claim has been denied.
  • Eliminate system features that encourage denials or payment delays: Eliminating system features that discourage timely payments may help prevent a worker’s misconstruing a delay as a denial.

WCRI Report: Avoiding Litigation: What Can Employers, Insurers, and State Workers’ Compensation Agencies Do? WC-10-18. July 2010.

Copyright: WCRI

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