At the Florida Workers' Compensation Forum (WCCP) in April,several speakers addressed the unique challenges emerging from theprocessing and defense of claims on behalf of some of Florida'slargest employers and workers' compensation service providers.

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Almost immediately following the conference came the FloridaSupreme Court's reversal of Castellanos v. Next Door (2009). Thentwo months later, the court ruled another critical decisionunconstitutional in Westphal v. City of St. Petersburg(2013). Clearly, the ramifications of these decisionsrepresent the most significant challenges faced by the Floridaworkers' compensation industry since Aguilera v. Inservices, Inc. (1999),which led to the sweeping reforms of 2003. All indications from thelegislature suggest that the industry at large is on the cusp of asimilar seismic shift in 2017.

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The Castellanos decision effectively removes the capthat has been in place since 2009 for applicant attorneys' fees inall Florida workers' compensation cases. Not surprisingly,following this development, actuaries and auditors alikeuniversally concur in reporting that their internal metrics reflectan alarming rise in petitions for benefits across the board, now ayear removed from Castellanos.

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Meanwhile, the Westphal ruling will undoubtedly resultin the broadening and expansion of an injured worker's access toand duration of benefits, as well as alternative legal remedies inmatters involving allegations of permanent vs. temporary totaldisability.

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It appears imperative that the industry adopts new innovativestrategies, specifically in the preliminary triage andinvestigative stages, to support claims associates as they embarkon the new challenges the inevitable fallout from these decisionsrepresent in Florida.

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One such strategy, specifically the “arising out of employment”or “course of employment” (AOE/COE) approach in the field, could bea solution. The AOE/COE investigation is the most effective way toempower claims associates to answer the fundamental question ofcompensability accurately and promptly. In medical terms, theprocess is comparable to a differential diagnosis.

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The timing appears perfect to introduce Florida associates tothe countless benefits and profound impact that would result fromthe application of AOE/COE coverage-specific non-surveillanceinvestigations in the field.

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The AOE/COE approach originated in California in the early1980s, following a particularly grievous case and judgment findingquite similar in nature and scope to Aguilera, which wasentered against the State Compensation Insurance Fund.

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To ensure this scenario was not repeated, the Workers'Compensation Appeals Board (WCAB) of California mandated a specificset of investigative steps be taken in each matter involving anapplication for benefits, to better address the fundamentalindustrial/non-industrial or AOE/COE coverage question during thefirst 30 days following receipt of the initial notice of injuryreport.

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Virtually all corollary elements associated with workers' compensation cases, such assubrogation, apportionment and pre-litigation discovery, flow froma well-executed AOE/COE investigation. Ultimately, our findings inthis initial and most critical process also come into play in thedevelopment of special investigative unit (SIU) files, whereappropriate, as well as being instrumental in the coordination ofsurveillance activities, which ultimately impact the ability todefend questionable claims.

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Equally important is the pivotal role these preliminaryinvestigations play in routine claims involving serious injuries.This service-oriented aspect enhances relationship building throughthe face-to-face communication process, which results fromconsistently applying this model between the injured worker,employer and insurer.

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This bridge-building between field and claims associatesrepresents the definition of outstanding customer service in theclaims industry. An empathetic approach not only reflects emotionalintelligence, but also lends invaluable hands-on guidance in thefield to both injured worker and employer alike. This level ofempathetic, hands-on service in the field often serves as thecritical deterrent against claimants immediately opting to pursuetheir claims through litigation.

The potential of the AOE/COE approach

There is little doubt that a multitude of carriers, third-partyadministrators and self-insured/self-administered entities wouldbenefit from the potential the implementation of the AOE/COEapproach yields. In addition to refining overall investigativeprocesses in the field, this approach also serves as a classic toolfor proactive planning.

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This approach could begin as an introductory service, offered todedicated units in states outside of Californiathat haven't experienced its benefits first-hand.Following the initial launch as a pilot program, as demand forthese services rises, the pieces would already be in place torespond by gradually expanding the service in markets through ahands-on training program, both internally and in the field.

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This demand would necessitate the development of a highlytrained specialty unit, which would serve as an example of superiorclaims-specific customer service to clients at contract renewaltime.

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Related: Can legislation change who's atfault?

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Risk management process

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Triaging a loss enhances the ability to identify anomaliesand gives adjusters access to witness information earlier in theprocess. (Photo: Shutterstock)

How the process works

Ideally, the initial rollout of the AOE/COE approach wouldspecifically target dedicated units charged with the handling ofFlorida-specific retail, hospitality and manufacturing accounts forsuch entities, keeping in mind the impact of theCastellanos ruling and all existing procedures currentlyin place for triage and investigative services in the field.

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A cost benefit analysis reveals that it would yield tangible andprofound client savings, specifically with respect to allocatedlegal expenses. This targeted approach to identifying and obtainingrecorded statements from witnesses in the field during the earlystages translates directly into savings on the litigationfront.

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Consistent engagement in this method of informal discoveryduring this initial triage process enhances the ability to identifyand interview all witnesses in the early stages, accurately gaugingtheir relative knowledge levels. Once the case is referred todefense counsel, the handling attorney would be placed in a primeposition to only notice those depositions certain to yieldquantifiable information with respect to their overall defensestrategies.

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Further, the implementation of this approach frees up seniorassociates carrying significantly higher than average quantities ofpending files for potential training of less experiencedassociates, increasing the overall population of seniorstaffing.

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Another prime advantage in AOE/COE field investigations is therapid turnaround of the communication and documentation theyprovide, relative to identifying the manner of injury, specificdate or repetitive use, as well as the nature and extent in thefirst 30 days.

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Conversely, red flags in claims would become more readilyidentifiable during the initial course and scope investigation.This would dramatically enhance the ability to notify the SIUimmediately by providing the initial reports along with defensecounsel when litigation is anticipated.

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Chief issues would include but not be limited to evidencepointing to suspected non-industrial causation; pre-existingmedical conditions; performance or attitudinal issues; and theverification of post-termination reporting of claims.

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The reason for using Florida as a test case lies in the timingto introduce this platform based on data provided by local auditorsconfirming that the ripple effect of Castellanos andWestphal is already taking hold there, and new petitionsfor benefits filings are dramatically on the rise.

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The industry's response in dealing with this new reality inFlorida will necessitate a renewed emphasis on swift yetcomprehensive preliminary investigations, coupled with an emphasison compassionate guidance in the field.

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It is clear that the reversal of Castellanos andWestphal will result in an inevitable and significantuptick in the frequency of petitions for benefits in Florida, andone way to get ahead of this development is through theimplementation of the AOE/COE approach in the field.

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This approach will not only aid in identifying the nature,extent and compensability of any given claim in the early stagesbut will also serve as an informal training mechanism for fieldstaff.

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Related: Top Florida court strikes down attorney feeschedule for Workers' Comp cases

Implementing the AOE/COE process

Because these investigations are preliminary and clearlyindependent of the SIU, it makes sense to develop this unit as away to cross-train licensed adjusters, such as looking forcandidates who have received their board certifications in FloridaWorkers' Compensation (CWC) or are credentialed in Workers'Compensation Litigation (CWCL) through the Florida WCCP.

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Identified as “field representatives” rather than“investigators,” they would serve in a hybrid role as both fieldinvestigators and field adjusters, acting as conduits of enhancedcommunication within large corporations.

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Each case would provide an opportunity to share with employersand injured workers alike the many tools available that willultimately prove invaluable in their efforts to navigate thecurrent Florida workers' compensation system. This level ofdedication in the field will not only yield prompt investigationsbut will also lead to organic training through consistentrepetition.

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The ability to respond in times of crisis defines the leadingedge of an industry. This approach serves as an example of apreeminent asset lacking in the current environment.

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Aaron Bergman, CWC, CWCL ([email protected])is the owner-operator of Everglades Claims Investigations.

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