Following liability is the fundamental claim investigation. In reviewing files it is not uncommon to find very basic questions unanswered. Here are a few examples:

1. Were statements taken? Were the questions asked appropriate?
2. Was the claimant indexed? Are there any hints of prior claims?
3. Was a medical authorization obtained? Was it appropriately used?
4. In auto claims, were both vehicles inspected and photographed?
5. Was there a scene investigation?
6. Can any portion of liability be imputed on others?
7. Was the attorney informed of everything that will be required for an evaluation to be complete including prior claim records, prior medical history, HCFAs and UBs with diagnosis and CPT codes and SOAP notes?
8. Was a background check run to identify marriages, known associates, criminal history, professional licensure and assets completed?
9. Were state licensure databases checked for the treating medical providers and attorney?
10. Were activity checks such as contacting neighbors or doing surveillance considered?

These are just a few basic items that should be considered on every BI claim. Far too often the adjuster will take a reactive approach, simply waiting for a demand to arrive. By being proactive, the adjuster gains the upper hand with written documentation as to what he or she must have to evaluate the claim. If the attorney does not comply, the adjuster can then justify a lower evaluation than what the attorney is demanding. Being proactive and citing exactly what will be needed to evaluate a claim is arguably the best hedge against bad faith allegations.

When the demand does arrive, evaluating the damages is critical to the ultimate outcome. Medical bills need to be evaluated for reasonableness. It is not uncommon for providers to “run up” bills or engage in deceptive billing practices. In fact, nearly one-third of all casualty-related fraud is the result of medical buildup.

Billings need to be checked against benchmark or fee schedule pricing. Some aggressive carriers are going so far as to evaluate bills based upon Medicare fee schedules.

Procedure codes need to be checked against diagnosis codes. It is not uncommon for there to be a diagnosis of lumbar sprain and subsequent treatment to some other part of the body. Deceptive practices include upcoding, unbundling and modifier abuse.

Consider a basic lumber MRI with and without contrast. A provider may bill 72148 and 72149, which would be appropriate for these as individual diagnostic tests. However, when they are conducted together, the appropriate code should be 72158, which is the bundled code. Unbundling and other deceptive practices will almost always be overlooked if a carrier is not using an effective bill review tool.

Negotiations are another aspect where carriers often struggle. It is important to remember that negotiation is a skill that improves with time – there are born negotiators and others who really struggle with the process.

This is arguably one of the most critical aspects of the claim as it defines what will ultimately be paid. An adjuster can conduct the best investigation, but if he can't negotiate the close, he will end up overpaying the claim, resulting in leakage. In other instances, the adjuster may not be able to effectively articulate the weaknesses of the plaintiff case, resulting in unnecessary and costly litigation.

The single biggest mistake made during the negotiation process is the focus on numbers. That is exactly what the attorney wants. Focus on the number and you will pay more than you should pay. Adjusters need to focus on the facts. Let the attorney try to leverage the numbers. But adjusters need to focus on the comparative negligence and why the claimant bears some percentage of fault for the accident. Focus on the priors and criminal history to impeach the credibility of both the claim and claimant.

Attorneys are in business to make money. Litigation is an uncertain and costly process. No attorney wants to waste time on a case that isn't a homerun. Educating and enlightening the attorney is the key to driving the right claim outcome.

By focusing on the fundamental execution of these key aspects of claims, insurers can improve quality, consistency and accuracy. Leveraging tools such as ClaimIQ and Decision Point can provide a proven and quantifiable lift, resulting in gaining a significant competitive advantage in the increasingly difficult marketplace.

Christopher Tidball is a casualty claims consultant and author of multiple books including Re-Adjusted: 20 Essential Rules to Take Your Claims Organization From Ordinary to Extraordinary! He spent more than 20 years as an adjuster, manager and business leader with multiple top tier insurance companies. To learn more, visit www.christidball.com.