Related: The verdict's in: Jury awards $8.2M for workplace injury

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When an adjuster leaves, the file is often transitioned to a different attorney based on the new adjuster’s preference. Even when files are kept with the same attorney there’s the likelihood the adjuster and current attorney will fail to connect, and the lack of connection creates gaps and lags in the handling of litigation at the file level.

Minimizing the impact of turnover

Although turnover is a given in any workers’ compensation program, several measures can help minimize its impact.

• Establish a clear and consistent litigation philosophy that’s consistent with your company’s core values and doesn’t change as the risk management team evolves. For instance, if employee satisfaction is a goal for your company, aggressive litigation may not fit within this philosophy. That doesn’t imply you need to give in on issues, but it does mean a more calculated approach to litigation may be appropriate. The philosophy should clearly support risk mitigation efforts established by the risk management team. If legacy claims are creating problems, early resolution should be a focus; however, many attorneys have been labeled “not aggressive enough” when suggesting this approach.
• Communicate the philosophy clearly and make sure it’s understood by all parties.
• Establish an employer-driven panel of attorneys. Interview attorneys and choose those who fit your company’s approach and objectives. It’s important not to allow a change of panel attorneys when adjusters change. Establishing an employer panel will encourage loyalty to your company and will provide consistency if and when the adjusters change.

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2. Untimely or insufficient authority

Authority issues often are the result of overworked, unresponsive or inexperienced adjusters or employer representatives. Notably, employers may lack understanding of the true exposure of a case or the impact of a specific venue or jurisdiction, including differences between states, such as:

• Cost variances. With respect to medical values, the same surgery in one state may cost considerably more in another state. Similarly, permanency values may differ so an identical injury in one state may result in a substantially higher payout in another.
• Medical expense variances. Treatment for aggravation of an underlying condition (uncontrolled diabetes or heart disease, for example) may be covered under workers’ compensation in one state, while another state won’t require the employer to pay for this.
• Venue variances. The same case that might result in a favorable ruling in one part of the state may get a dramatically different ruling in another part of that state.

A lack of elevation point when an adjuster and attorney do not agree is also an issue. Politics between defense attorneys and adjusters or claims administrators might play a role in whether significant issues get elevated and resolved.

These circumstances can drive up costs by extending the duration of litigation or increasing the exposure of the claim, in some instances, substantially.

Avoiding authority issues

To avoid the most significant authority issues in a workers’ compensation program, employers should:

• Have an elevation procedure in place and require defense attorneys to use it.
• Include the defense attorney in all claim reviews.
• Make sure they understand their exposure by:
• Asking the right questions;
• Knowing how an injured worker’s age may impact the exposure;
• Understanding how the jurisdiction will impact the exposure;
• Knowing the significance the claimant’s attorney may have on the overall exposure; and
• Recognizing any co-morbidities involved and how they will impact the claim value.

Related: Are you an exceptional workers’ compensation adjuster?

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3. Lack of data for litigation program measurement

For the most part, the industry has not yet figured out what to measure or how to measure a workers’ compensation litigation program. Essentially, the systems in place today have not been built to capture litigation data points in a consistent or usable manner.

For example, workers’ compensation litigation claims can open and close multiple times; systems typically do not capture this information. Even duration, which would otherwise be a fundamental litigation measure, becomes difficult to capture and evaluate.

Many claim administrators cannot compile an accurate list of claims in active litigation or the firms involved. Furthermore, it is difficult for any claims administrator to track whether a claim is closed on a permanent basis or on a partial or issue basis.

Without objective information to assess performance, attorneys are often measured subjectively, including being “rated” by the adjusters. Defense attorneys understand this and seek to build relationships at the adjuster level. Consequently, the “likeability factor” of a defense attorney can become more important than skill and knowledge.

Another related outcome stemming from the inability to capture critical data is that significant leakage in programs often goes unmeasured and unnoticed. If there is an opportunity to settle — but the attorney isn’t provided adequate authority and doesn’t settle — the claim stays open. Thus, it incurs costs far exceeding the previously requested authority, which is true leakage. This scenario is not uncommon, but it isn’t measurable without extensive auditing.

Related: 10 ways in which workers' compensation needs to evolve [Opinion]

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Because there is no way to track whether a file is transferred from one firm to another, it becomes impossible to measure law firms objectively. Similarly, authority and Medicare Set-Aside Agreement (MSA) process opportunities often go unnoticed.

Addressing data issues

Some law firms have developed capabilities to capture more detailed and accurate information, which they provide clients through monthly or quarterly reports.

At the same time, on a proactive basis, employers can determine the data they require and work with their law firms and claims administrator to capture this information. This might include:

• Authority requests (when requested, when granted, the amount requested and the amount granted)
• MSA requests (when requested and when obtained)
• Case in chief settlements (the date settled and, if settled, full and final amounts)

Issues related to inconsistency and turnover, authority and lack of data can undermine efforts to manage workers’ compensation litigation — and consequently result in increased costs. By taking steps to address each of these challenges, employers, their insurers and administrators can improve their efforts to manage litigation and drive down overall program costs.

Related: Predictive analytics reduces risk in workers’ comp

Steven Testan is founder and senior managing partner of Adelson, Testan, Brundo, Novell & Jimenez, a national law firm focusing on workers’ compensation defense. He can be reached at [email protected] or 805-367-5655.

Karen Stankevitz is director of Consulting Services at Adelson, Testan, Brundo, Novell & Jimenez. She can be reached at [email protected] or 612-308-3500.