Top drivers of high claim costs and attorney involvement

Two recent studies by the Workers' Compensation Research Institute (WCRI) provide valuable insights into the drivers of high-cost comp claims and attorney involvement as well as the most effective policy measures to address these serious issues.

High-cost claims

Noting there is no universally recognized standard definition of a high-cost claim, the authors of Factors Associated with High Cost-Claims defined a high-cost claim as one with more than seven days of lost time that is in the top five percent of medical payments within 36 months of injury, excluding catastrophic claims and claims with more than seven days of lost time but with total medical payments of less than $5,000 at 36 months post-injury. It also considered the characteristics of the injured worker, the presence of comorbidities/degenerative conditions, the number of providers and coordination of care, the types and intensity of services provided, and attorney involvement. Claims that had medical spending greater than $10,000 in a 30-day period, which usually meant surgery or in-patient hospital, were classified as "resource-intensive services." The study involved 32 states and included more than 720,000 opened and closed claims.

Among the major findings were:

The average overall cost including medical and indemnity benefits of a high-cost claim was $200,600 almost five times higher than the average non-high-cost claim ($41,363)
Medical payments for a high-cost claim, which averaged $103,368 were more than five times higher than a non-high-cost claim ($19,836)
The average duration of temporary disability for a high-cost claim was 64 days versus 18.3 days for a non-high-cost claim
Men had the highest percentage of both high-cost and non-high-cost claims - 63 percent
Consistent with previous studies, the largest percentages of both high-cost claims and non-high-cost claims occur within two years or less of initial employment
Workers in the construction industry are most likely to have high-cost claims, followed by those in agriculture, forestry, and fishing
Attorney involvement rises with the cost of the claim -70 percent of high-cost claims had attorney involvement, compared to 44 percent for non-high-cost claims
The likelihood of a claim becoming a high-cost claim increases by 46 percent with degenerative conditions and 33 percent with comorbidities
Five different types of injury were associated with a claim becoming high cost: (1) neurological back injuries, (2) neurological neck injuries, (3) shoulder impingement/rotator cuff tear, (4) fractures above the ankle, and (5) disc herniation. Fractures between the ankle and hip or pelvis, spinal fractures, and severe burns make a high-cost claim 8-9 times more likely, and herniated discs or disc disorders, neurological neck and back conditions, and spine pain, strains, or sprains make a high-cost claim 4 - 5 times more likely.
High-cost claims are more likely to involve multiple providers, especially in the first three months following injury. Coordination of care issues seem to be a driver as claims with the same provider or organization for initial physical medicine visits and most subsequent physical medicine visits are 33 percent less likely to become high cost than claims with multiple providers
Claims with one or more months of late resource-intensive services (one year or more after the date of injuries) are 35 percent more likely to become a high-cost claim as compared to those claims that had no months of resource intensive services
Older workers (55 years and up) have a 6 percent increased likelihood of having a high-cost claim when compared to workers aged 35 to 40, but overall individual worker characteristics only had a moderate impact on the likelihood that the claim would be high cost

Key takeaways for employers

Carefully monitor claims with late resource-intensive services to keep claims on track and facilitate adjustments to prevent unnecessary delays in recovery. According to the study, late resource-intensive care "may indicate patterns of care that are inconsistent with treatment guidelines or expected practices" or indicate complications related to the injury or treatment.
Early identification of claims with comorbidities and degenerative conditionsis critical to best address workers' needs for appropriate care while controlling costs. Pay close attention to the types of injury in the study associated with a claim becoming high cost.
A high level of care coordination and continuity of care offers the potential to reduce costs and improve recovery. The selection of the provider plays a monumental role in the life of a claim as does the involvement of nurse case managers to optimize outcomes and manage costs. Partnering with a strong occupational provider and/or network and focusing on outcomes rather than cost-cutting at the outset of a claim will hasten the return to work and result in significant savings.

Attorney involvement

WCRI's recent study, Impact of Attorney Representation on Workers' Compensation Payments, examines what types of cases attorneys are likely to get involved with and the impact on indemnity payments following work-related injuries to help workers cover their loss of income. The study examined more than 950,000 claims in 31 states between Oct. 1, 2012, and Sept. 30, 2019.

Attorneys are more likely to get involved in cases with serious injuries or where disputes arise. Not surprisingly, attorney involvement significantly increased the costs of the claim. When attorneys were involved the average indemnity benefit per claim was $41,148, compared to an average of $7,957 without lawyer involvement. Thirty-four percent of claims with more than seven days of lost time involved an attorney, and 64 percent of claims with permanent partial disability involved an attorney. Types of injuries that had high attorney involvement included neurological spine pain (61 percent) and inflammations and carpel tunnel syndrome (40+ percent). Only 14 percent of total disability claims involved litigation.

Another significant factor triggering attorney involvement was worker tenure. The highest percentage (39 percent) of workers seeking an attorney were new workers with less than six months' tenure. Several earlier studies have found that when employees do not understand the work comp process, they will seek legal representation. Given that new workers incur a large proportion of workplace injuries, it is critical that employers have effective hiring procedures, implement a robust onboarding program, and educate new employees on safety, claim reporting, and injury management.

More insights to attorney involvement can be found in a 2010 study by WCRI, Avoiding Litigation: What Can Employers, Insurers, and State Workers' Compensation Agencies Do? The study found that workplace trust issues, fear of claim denial, and injury severity are the main reasons for attorney representation in workers' compensation claims. It's important to point out that a simple delay in paying a medical bill or an erroneous interpretation of a communication is enough to stoke the worker's fear that the claim is going to be denied, thus leading to attorney involvement. The most effective way to counteract this fear is through reassurance and the building of trust.

Key takeaways for employers

While it's important to address the business aspects of comp claim, it's equally important to address the emotional aspect of the injured worker's experience. By demonstrating a commitment to your workforce's well-being and promoting a strong safety culture, you can lessen the possibility of attorney involvement. Stay involved and communicate frequently with injured employees who are out of work. Promote the Recovery-at-Work program and train supervisors to be empathic. Treating injured employees with respect, clearly explaining the process, and making them feel confident that they will get the treatment they need and that their job is secure will help reduce uncertainty and fear.