Navigating the workers' comp subrogation dance
Learn the five steps to ensure a smooth workers’ comp subrogation process.
Workers’ compensation subrogation is an area of claims practice requiring the marriage of multiple disciplines. To succeed, the workers’ compensation subrogation specialist must be adept at understanding the file, so there are coordinated efforts and organization of the settlement plan when the files converge. This team member must also be well-versed in liability review and the statutes regarding workers’ comp subrogation in each state. This is in addition to possessing a working knowledge of the negotiation process and anticipated response and application of the law in various situations.
While at times there may be a minimal connection between workers’ compensation and the subrogation portions of the file, they can both be active at the same time. This may happen when the employee’s medical condition requires a lengthy recovery. For example, when the employee isn’t at a maximum medical improvement for several years, there is a situation where the claim and subrogation specialists are both working the file. At the time of settlement, the two specialists need to work together to make sure all of the elements are addressed and the result is appropriate for the employee, as well as the employer/carrier.
The coordination of both roles resembles a complicated dance, as the claim often includes timing and elements required by state statute, and the subrogation portion is connected to the state liability substantive and procedural laws. Similar to dance partners who know the steps and move in a coordinated manner, there can be great success on the dance floor. But when there are missteps, the result can be a disaster.
The following are steps for each partner to ensure a smooth workers’ compensation subrogation process.
1. Divide roles
One of the most common pitfalls in a claim organization is having the same person fill the role of claim specialist and subrogation specialist. There are examples where this may work, but the process can be compared to one person trying to dance the steps of both partners at the same time.
Therefore, separating duties makes all the difference. First, the claim specialist’s process is defensive, as the entire claims process from their perspective is about being responsive.
The subrogation specialist’s job duties, on the other hand, are more affirmative than responsive. For example, the subrogation specialist leads the primary subrogation investigation and pushes to move the file forward. Managing both affirmative and defensive actions at the same time is difficult.
Second, the employee and their attorney have a different relationship with the claim specialist than the subrogation specialist. While the claim specialist needs to be empathetic, there is a separation between the claim specialist and the employee/employee’s attorney. The former is responding to requests from the latter. They are, in many ways, on opposite sides of the discussion.
Claim specialists are working to ensure that the employee is treated appropriately and returned to work in the most expeditious manner with the lowest appropriate payments and the lowest expense.
The employee and their attorney are working to negotiate the best opportunities for the employee, even if that means the employer and carrier pay more than is technically required. The relationship is genial, but adversarial nonetheless.
The relationship between the employee/employee’s attorney and the subrogation specialist is generally compatible. Both are working toward increasing the third-party recovery to the highest possible amount and working as a team against the third party and their carrier. Both define success as the highest third-party recovery possible.
When one person is handling both the claim and subrogation specialist roles, it is often difficult to be both partner and adversary at the same time.
Third, from a procedural perspective, diary management of both the claim and the third-party liability claim is difficult. Focusing on the workers’ comp portion of the file requires strict adherence to timelines. Weekly/ biweekly temporary disability checks, permanency checks, adjustment and payment of medical bills, return-to-work and calculation of partial disability checks are all tightly timed and focused on accuracy. The liability timeline involves different court scheduling cycles and activities at different intervals, with the largest challenge being the opportunity to coordinate with the employee’s third-party attorney.
2. Have technical strength
The workers’ comp subrogation specialist is the intermediary responsible for coordinating the file elements between the injured worker’s claim and the third-party claim, which have different goals.
In that position, subrogation specialists need to be sure that they know the technical statutory workers’ comp subrogation rights and responsibilities in each state, which are particularly beneficial when negotiations are necessary.
The subrogation specialist also needs to be fully conversant in the local habits in the jurisdiction.
We often hear of the three-way split between the employee, the employer/carrier and the employee’s attorney. Although that is the typical go-to split, that doesn’t mean the subrogation specialist cannot negotiate a better result.
3. Be laser-focused
The workers’ comp subrogation specialist needs to be laser-focused on the subrogation portion of the file. This means being involved in all stages of the file including:
- Entering notes to describe the review, and why the pursuit of actions is or is not recommended.
- Pushing for an early and thorough investigation of the file.
- Maintaining a plan of action, including a description of “why” anytime the plan changes.
When the subrogation specialist focuses on the subrogation portion of the file it can increase the chances for a more successful recovery outcome.
4. Be a leader & a team player
During the negotiation of the workers’ comp subrogation file, there are times when the subrogation specialist is the person with the most knowledge of the statutory plan for that state.
In those cases, the subrogation specialist needs to take the lead in the negotiations and not be afraid to correct any other person involved, including opposing counsel, workers’ comp defense counsel or even the liability judge.
Still, the statutes are complex and local history does play a part in the application. As a result, the subrogation specialist should be one player on a team of experts who work together to review the more complicated claims and applications and discuss options.
5. Trust the process
When the process works well, there is an orchestration of participants who come together to achieve the best outcome. The process is the key. There are times where liability isn’t favorable. There are times when the employee’s version of events changes. There are times when a jury doesn’t believe the employee or make the right findings regarding responsibility. But at the end of the day, if efforts are coordinated, the process will help avoid missteps and provide superior claim outcomes.
Ralph Touch (Ralph_Touch@gbta.com) is vice president, carrier practice, Gallagher Bassett. He has 27 years of experience in commercial claims including workers’ compensation, general liability, auto and specialty.
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