Experts Share the Lessons They’ve Gleaned from Settling Their Toughest Claims
Claims, much like the best-laid plans, can often go awry. And while there are often early indicators that things may go off the rails, sometimes even the most seasoned claims professionals, employers and defense attorneys are surprised.
Other times, there are signs of impending challenges but the claim may still prove difficult to manage.
Examining what went wrong when claims go south can help claims professionals learn what to do next time — and what not to do. During this insightful session at National Comp, a longtime defense attorney and employer shared their perspectives.
Held on September 20th, “What Went Wrong? An Employer and a Defense Attorney Share Lessons Learned from Their Toughest Claims” was a lively discussion filled with war stories and advice from those who have been there and done that.
The session was facilitated by Suzy Braden, MBA, CWCP, director of workers’ compensation claims at Encompass Health; and Eric Trivett, Esq., partner at Speed, Seta, Martin, Trivett, Stubley & Fickling LLC. The two experts provided a balanced view of claims handling based on their collective years of experience in workers’ compensation claims, and interjected claims-handling anecdotes to illustrate their thoughts.
What Happens When Things Go Wrong
At the end of a large loss or catastrophic claim, we should ask “What went wrong?” after the claim has been settled. “We suggest that this is the time to think about the case and do a postmortem,” Trivett said. “Get the players involved and ask the question ‘What went wrong?’ The answers may surprise you.”
Claims aren’t always straightforward, and this after-action review can be invaluable. There can be grey areas inadvertently included in policy language. Insurers may interpret coverage situations differently from each other, and courts can set precedents through their decisions, changing the scope and understanding of coverage. Policyholders may forget to include important details in their loss reports or could misrepresent the facts of the loss. All of these considerations make claims a complex and ever-changing facet of the insurance industry.
Sometimes a claim will be moving forward in a routine way when things suddenly change. A previously receptive claimant may stop returning phone calls, leading the adjuster to wonder what changed — until they receive an attorney representation letter and understand that the tone of the claim has shifted.
Other times, insureds will stop cooperating even without an attorney to represent them. As the investigation continues, insureds and claimants may become dissatisfied with settlement offers or delays in the process — and often the claims adjuster bears the brunt of this frustration. Those on the front line of claims have a challenging job even during the best of times.
One of the challenges adjusters face is timing. Adjusters must know when to settle and when to wait. Settlement decisions in workers’ compensation losses often come down to a few key considerations, like knowing the jurisdictional rules, understanding the medical facts of the case and knowing the concerns of both sides of the table. But as the panel explained, sometimes doing nothing is the best option.
Despite conventional wisdom, they said, early intervention can be the wrong choice in some cases. “Be strategic. Doing nothing should always be on the table with a large loss,” Trivett said.
Braden added, “Deciding whether to settle is different in every jurisdiction. There is a great balance in trying to figure out what is right for both sides.”
The natural instinct is often to close the case as soon as possible, since adjusters are often judged on their closing ratios. But settling too early can be detrimental. Since most treatment happens in the first 90 days after injury in a large loss, the early, frequent treatment costs can drive up initial settlement estimates. Because the treatment frequency will slow as the injury progresses, settling too early could cause an inflated settlement rate based on those early treatment costs, as attorneys will base future treatment costs on these initial rates.
Trivett explained that there is wisdom in waiting to see the severity of injuries and the course of treatment over time. He reminded the audience not to “confuse a serious accident with a serious injury. They are not necessarily the same thing.”
Braden recommended keeping open communication with claimants and their families throughout the treatment process before settlement occurs. She said, “Manage settlement expectations, and level with the client and family what the outcome may look like. Just because we aren’t settling today doesn’t mean we won’t end up settling.”
Advice for Managing and Mitigating Large Losses
The speakers offered some advice for the audience on how to manage and mitigate a large loss. A key point stressed by both speakers was the need for the right tools at the right time.
“Think outside the box,” recommended Braden. She noted adjusters should think about the timing of their tools. Consider things like when psychological treatment is appropriate and if early pain management is warranted. The timing of surveillance, independent medical examinations and other tools is important. Ask the questions you need answered, not just standard questions.
Another critical point stressed by both the claims management perspective and the defense attorney viewpoint is the importance of matching your defense lawyer and your physicians to your values and vision. It is about knowing the venue. Braden explained how certain venues, judges, employers and attorneys can change the management and resolution of the claim.
She said, “With so many different people who can impact your claim, you must be thoughtful. [For example,] in some venues, you can’t direct care, but in some states, you can. Know who the right players should be at the table and make sure their vision matches your vision.”
Trivett agreed, saying it was important to understand, as a defense lawyer, how his clients define success. It’s important to ask about any client-specific constraints and to understand how the client defines success.
Finally, the speakers talked about patience. Claims professionals have to exercise caution as they investigate claims. While adjusters work to be thorough, they often have to make decisions without having all the information. But conversely, they also need to wait for third-party investigations, data, medical exams and examinations under oath before resolving the claim. And if it goes to litigation, it can take years before resolution.
A seasoned claims professional understands this cadence and avoids premature action and judgments. As the speakers noted, sometimes doing nothing is the best course of action. &