Tim Stanger is Vice President – Claims with SafetyNational.

Analytical assessment of data continues to expand in theworkers' compensation claim management process. It is generallyaccepted that 15% – 20% of all claims make up 80% of overall totalcosts. Recent trends are focusing on identifying the “15% – 20%”claims early in the process by going beyond traditionalbenchmarking.

The claims identified through the analytical process areprojected to get worse based on historical results on similarclaims and factors unique to the specific claim. Oftentimes,these claims become more complicated because of injury migrationand causation disputes, complex medical diagnoses and treatment,and increases in the temporary and permanent disabilities. Becauseof the complexity and developmental attributes, these claimsgenerally require more litigation. Consequently, applying thepredictive analytics to the litigation process and engaging theright attorney in the claim before litigation gets out of controlcan effectively impact litigation costs and the overall claimoutcomes by helping to modify the predicted outcomes.

Litigation management is an ongoing process that begins beforethe injury occurs, requires diligent oversight throughout thelitigation, and should result in an objective and subjectiveassessment focused on the overall litigation outcomes. Pre-injurymanagement begins with the need to fully understand the nuancesinvolved with the applicable jurisdictions, as some are definitelymore prone to litigation than others. This knowledge should beapplied in establishing processes and procedures to best manage theclaims and where possible limit the claimant's perceived need forrepresentation.

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

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

Selecting the right attorney is very important and should not bebased on personal relationships alone. Simply put, some attorneysare more experienced in complex litigation matters and claimassignments should be made accordingly. Identifying claims throughthe predictive analytics process can help guide the selection andensure that the right attorney is selected for each claim. Equallyimportant, it is critical to make sure the adjuster understandsthat their responsibility is to manage the litigation process asopposed to turning it over to counsel and/or letting the litigationcontrol the claim.

Once an attorney has been selected, it is critical that arealistic budget and a well-defined litigation strategy areestablished. Once the strategy is in place, the adjuster mustremain cognizant of developments and associated litigation costsand make adjustments when necessary. The overall cost of defenseshould be considered in disposition plans as it makes no sense tolitigate a claim for two years only to settle for an amount youcould have settled for at the onset of litigation.

Post-litigation management has traditionally involved minimalbenchmarking that compares litigation costs against historicalresults. Unfortunately, these efforts are generally more focused onthe costs as opposed to overall outcomes. Oftentimes claims areclosed without assessing whether pre-litigation goals were met, howclose the budget came to the actual costs, whether the litigationduration was appropriate and most important, a determination onwhether the selected counsel successfully mitigated the overallclaim costs. Very little time and effort is currently given toanalyzing litigation outcomes and the actual impact the attorneyhad mitigating the overall claim costs. Once implemented, anassessment on the overall litigation and claim outcomes can helpdetermine the best attorney for future claims and ultimately, keepsthe litigation management focused on the “big picture”– total claimcosts.

In closing, benchmarking, predictive analytics and psycho-socialanalyses are ever-growing elements within the workers' compensationclaim management process. There is a wealth of data that can bevery helpful in identifying when claims should be assigned to anattorney and determining the best counsel for each case based ontheir expertise. Incorporating the data assessment with apost-litigation outcomes-based assessment will have a significantand positive impact on the entire litigation process and moreimportant, the total cost on the claims.