Increasingly common in California are workers compensation claims involving cumulative trauma in which causation is questionable, the claim may have been filed after the injured worker is terminated or quits, and the claimant’s doctor later adds additional diagnoses.
According to panelists at several sessions during last week’s annual Workers Compensation and Risk Conference, the question for employers is whether to settle or fight. There’s a growing consensus that settling can be the best option for such so-called runaway claims, but there are red flags that may signal plausible defense, the experts said.
“As we know, these claims don’t get better; they get worse,” said Anthony Culpepper, partner at Michael Sullivan & Associates LLP in El Segundo, California.
Michael Sullivan, general managing partner of the firm, said, settling can often be the best approach, as the cost to fight claims in California has increased exponentially due to new regulations related to expenses for reviewing medical records. Some cases are challenging to win without an extensive review of records that document pre-existing conditions or earlier injuries, he said.
Legal experts have long complained about costs to review medical files in California: $3 a page in excess of the flat rate of $2,015 for the first 200 pages of medical documents. Many cases can involve thousands of pages.
“A lot of times the problem is you didn’t settle,” Mr. Sullivan said.
Miscalculating the value of a claim is also a pitfall, as employers often put a cap on a proposed settlement when increasing the amount might save in the long run, Mr. Culpepper said.
In one older case, a plaintiff’s attorney asked for $50,000 on a cumulative trauma injury, and Mr. Culpepper was given a $35,000 maximum to settle. Years later the claim — still open — was nearing $3 million in costs, he said.
“Somebody didn’t value that claim properly and it was a big, big miscalculation,” he said. “We’re all trying to get rid of these things early before they get expensive.”
Injuries can start small and snowball so there needs to be a focus on a claimant’s medical history, Mr. Culpepper.
“If they’re taking (non-steroidal anti-inflammatory) medications, which sometimes you don’t always know at the beginning, probably their kidney is going to get worse. Now, you have bought a kidney disease claim,” he said of NSAID drugs commonly prescribed long term to those with musculoskeletal injuries and pain, which can complicate claims that continue without closure.
Creating a team to adequately evaluate claims and a claimant’s history is a best practice for ensuring effective communication, said Karen Saturday, Trabuco Canyon, California-based associate vice president and program claims director at Falls Lake Insurance Cos.
“The longer (the claim) stays open, the worse it’s going to get,” she said. “You want to ensure that you have built the best team possible so you are getting the information as quickly as you can, and you are communicating back and forth with your staff as expediently as possible.”
Indicators that a claim can be fought are increasingly easy to spot, said Steven Cox, partner and president, Cox and Associates P.C., which represents employers in defending comp claims.
Mr. Cox said the No. 1 goal should be to spot problematic claims early. He outlined red flags, including that the mechanism for the injury is “questionable,” as when body mechanics and the injury described do not align; where there’s an early review for surgery, indicating a possible earlier problem with the allegedly injured body part; an unusual diagnosis that is not familiar in comp settings, such as strokes that don’t fall into the 99% of comp injuries that are orthopedic in nature; and changes in diagnoses and body parts added to the claim.
Often, the issues can be spotted early, he said.
“My biggest takeaway is when everything has gone crazy, when my little carpal tunnel case has turned into a failed back and a knee replacement or a hip replacement, before all that happens, let’s put on the brakes. Look at the first medical reports,” he said.
This article was first published in Business Insurance.