NU Online News Service, May 7, 3:42 p.m. EDT
ORLANDO, Fla.–As states exit the recession with a focus on saving money in the new economy, workers' compensation systems will have to strip out as many unnecessary costs as possible to be successful, a workers' compensation expert said.
Speaking at the National Council on Compensation Insurance Holding's Annual Issues Symposium held here, Richard Victor, executive director of the Workers Compensation Research Institute (WCRI), defined "unnecessary costs" as costs borne by the employer in a workers' comp system that do not improve the outcomes for injured workers.
Speaking to making reductions in adverse employer and payer actions that encourage disputes, Mr. Victor cited some examples and indicated where states can help facilitate solutions.
After a workers' comp claim is filed, Mr. Victor said, the worker generally has three fears: that the worker will lose his or her job; that the worker is distrusted by the supervisor, and a perception that claim denial has occurred or will occur.
Those with job loss fears are twice as likely to hire an attorney, Mr. Victor said. Those who feel distrusted are 50 percent more likely to hire an attorney.
Mr. Victor said perceiving that a claim denial will occur is easy for a worker that is not getting money or receiving communication from the employer or insurer.
He recommended that states facilitate ways to get information to workers. He said states should have a way for workers to call and find out what will happen with a claim and when. If the claim process deviates from the information given, workers should be able to call back and get further guidance.
States with high costs per claim should also analyze their systems and see if the extra costs are leading to better outcomes for workers, Mr. Victor advised.
He contrasted the systems in states like New Jersey and Maryland with Wisconsin, noting that defense costs are around 40 percent of payments in the former states and 14 percent in the latter state.
Wisconsin has a higher incidence of voluntary partial permanent disability (PPD) payments, he said, while such payments are virtually non-existent in New Jersey and Maryland. Workers in Wisconsin are also less likely to hire attorneys, he noted.
The key, according to Mr. Victor, is the system in place in Wisconsin, where the traditional use of "dueling docs"–the worker gets a lawyer, who in turn gets a doctor, and the payer gets its own doctor and they testify against each other–is discouraged in favor of a system more akin to salary arbitration in baseball.
In Wisconsin, he said, there is no "splitting of the difference" when dueling docs are used, he said. Instead, the workers' comp director picks one side or the other.
This, he said, encourages both sides to make their most reasonable offers, as each side strives to make a more reasonable case than the other.
"It's a whole different dynamic," that leads to both sides coming closer together rather than moving further apart, he said.
Some states also make paying claims quickly more difficult, Mr. Victor said. Maryland, for example, requires a worker to formally file a claim before payments can begin, even if the insurer knows there's a claim, he said.
Workers perceive the lack of payment as probable denial and hire attorneys, he noted, asking how that improve worker outcomes.
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