Tim Stanger is Vice President – Claims with Safety National.

Analytical assessment of data continues to expand in the workers' compensation claim management process. It is generally accepted that 15% – 20% of all claims make up 80% of overall total costs. Recent trends are focusing on identifying the “15% – 20%” claims early in the process by going beyond traditional benchmarking.

The claims identified through the analytical process are projected to get worse based on historical results on similar claims and factors unique to the specific claim. Oftentimes, these claims become more complicated because of injury migration and causation disputes, complex medical diagnoses and treatment, and increases in the temporary and permanent disabilities. Because of the complexity and developmental attributes, these claims generally require more litigation. Consequently, applying the predictive analytics to the litigation process and engaging the right attorney in the claim before litigation gets out of control can effectively impact litigation costs and the overall claim outcomes by helping to modify the predicted outcomes.

Litigation management is an ongoing process that begins before the injury occurs, requires diligent oversight throughout the litigation, and should result in an objective and subjective assessment focused on the overall litigation outcomes. Pre-injury management begins with the need to fully understand the nuances involved with the applicable jurisdictions, as some are definitely more prone to litigation than others. This knowledge should be applied in establishing processes and procedures to best manage the claims and where possible limit the claimant's perceived need for representation.

Historically, litigation management has centered on pre-injury procedural aspects, such as negotiating the lowest hourly rates or pushing for discounts, whether it be a percentage of the bill or a flat rate. Hourly rates are important, but the concept of getting what you pay for cannot be discounted. The attorney with a lower rate and fees could end up with inferior outcomes that result in overall higher claim costs. If not monitored, lower rates and discounts could also result in non-essential litigation to make up the lost revenue due to lower rates and discounts.

Best practices and litigation guidelines usually delineate procedural aspects like timeframes for submitting reports, limits on travel expenses and limits on time spent for various components in the litigation process. Evaluating legal bills for adherence to rates and litigation guidelines can be an administrative nightmare for adjusters and as such, utilization of a vendor to review bills and make sure they are in compliance is advisable, so long as the associated costs are justified.

Selecting the right attorney is very important and should not be based on personal relationships alone. Simply put, some attorneys are more experienced in complex litigation matters and claim assignments should be made accordingly. Identifying claims through the predictive analytics process can help guide the selection and ensure that the right attorney is selected for each claim. Equally important, it is critical to make sure the adjuster understands that their responsibility is to manage the litigation process as opposed to turning it over to counsel and/or letting the litigation control the claim.

Once an attorney has been selected, it is critical that a realistic budget and a well-defined litigation strategy are established. Once the strategy is in place, the adjuster must remain cognizant of developments and associated litigation costs and make adjustments when necessary. The overall cost of defense should be considered in disposition plans as it makes no sense to litigate a claim for two years only to settle for an amount you could have settled for at the onset of litigation.

Post-litigation management has traditionally involved minimal benchmarking that compares litigation costs against historical results. Unfortunately, these efforts are generally more focused on the costs as opposed to overall outcomes. Oftentimes claims are closed without assessing whether pre-litigation goals were met, how close the budget came to the actual costs, whether the litigation duration was appropriate and most important, a determination on whether the selected counsel successfully mitigated the overall claim costs. Very little time and effort is currently given to analyzing litigation outcomes and the actual impact the attorney had mitigating the overall claim costs. Once implemented, an assessment on the overall litigation and claim outcomes can help determine the best attorney for future claims and ultimately, keeps the litigation management focused on the “big picture”– total claim costs.

In closing, benchmarking, predictive analytics and psycho-social analyses are ever-growing elements within the workers' compensation claim management process. There is a wealth of data that can be very helpful in identifying when claims should be assigned to an attorney and determining the best counsel for each case based on their expertise. Incorporating the data assessment with a post-litigation outcomes-based assessment will have a significant and positive impact on the entire litigation process and more important, the total cost on the claims.

Special Reports /

Using predictive analytics in litigation management

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