Understanding Becomes Healing: A Deep Dive Into the Growing Impact Mental Health Has on Workers’ Comp Claims

When asked about trends they have noted in workers’ comp claims, nurse case managers agreed mental health was the clear leader. But what's placing it in the spotlight?

By: EK Health Services, Inc | February 17, 2022

It’s 2022 and the hits just keep on coming.

The workers’ compensation industry is feeling the catastrophic impact of the lingering pandemic in countless ways. In order to get a better grasp on what that looks like for injured workers, EK Health surveyed its nurse case managers on several issues.

The company asked what topped the nurses’ list of contributors to claim escalations and costs. Mental health was the clear leader.

“Unrecognized and untreated mental illnesses drive up workers’ compensation claim costs and disability,” said Douglas Benner, MD, MS, FACOEM | Chief Medical Officer for EK Health Services, Inc.

Here is a deeper look at how mental health is impacting workers’ comp claims.

Douglas Benner, MD, MS, FACOEM, Chief Medical Officer for EK Health Services, Inc.

The Link Between Mental and Physical Health

Benner said mental and physical health contribute equally to an injured worker’s overall health.

“That is why we place such a high priority on patient advocacy and establishing a positive relationship between the injured worker and his or her employer,” he said. “It is why our nurse case managers communicate so frequently and thoroughly on all aspects of each claim.”

According to the Centers for Disease Control (CDC), depression increases the risk for many types of physical health problems, particularly long-lasting conditions like diabetes, heart disease and stroke. Similarly, the presence of chronic conditions can increase the risk for mental illness.

Mental illness can have a natural concurrence with workers’ compensation claims, given the frequency of factors that can contribute to risk for mental illness, including:

Adverse life experiences, such as childhood trauma, or a history of physical or emotional abuse
Chronic medical conditions, such as cancer, heart disease or diabetes
Biological factors or chemical imbalances in the brain
Abuse of alcohol or drugs
Loneliness or isolation

“Since many of those dynamics are common to work-related injuries and exacerbated by the fear and isolation related to the ongoing pandemic, we are seeing the rise in mental illnesses impacting claims,” Benner said.

Prevalence of Mental Health Concerns

As noted by the CDC, mental illnesses are among the most common health conditions in the United States, citing the following statistics:

More than 50% will be diagnosed with a mental illness or disorder at some point in their lifetime.
1 in 5 Americans will experience a mental illness in a given year.
1 in 5 children, either currently or at some point during their life, have had a seriously debilitating mental illness.
1 in 25 Americans lives with a serious mental illness, such as schizophrenia, bipolar disorder, or major depression.

COVID-19 Impact on Mental Health

The National Institute of Mental Health (NIMH) — the lead federal agency for research on mental disorders — has closely tracked the impact COVID-19 has had on mental health trends.

In his April 2021 article titled One Year In: Covid-19 and Mental Health, NIMH’s director stated, “Several surveys, including those collected by the Centers for Disease Control (CDC), have shown substantial increases in self-reported behavioral health symptoms.”

“According to one CDC report, which surveyed adults across the U.S. in late June of 2020, 31% of respondents reported symptoms of anxiety or depression, 13% reported having started or increased substance use, 26% reported stress-related symptoms, and 11% reported having serious thoughts of suicide in the past 30 days. These numbers are nearly double the rates we would have expected before the pandemic.”

“As in prior studies, this survey showed that risk factors for reporting anxiety symptoms or suicidal ideation included food insufficiency, financial concerns, and loneliness.”

How Employers Can Help

“Many of our employer clients have asked what more they can do to provide additional mental health support — not only for their injured workers but also for their entire employee population,” Benner said.

“We are constantly collaborating with our expert clinicians and subject matter experts to do just that. And the results are promising.”

By serving as patient advocates and establishing a positive and supportive rapport, the nurse case manager is often the first to become aware of mental health needs and act appropriately to provide the necessary support.

EK Health’s nurse case managers have been able to fine-tune their interactions with injured workers to proactively address mental health concerns as they surface and to direct as needed to appropriate resources.

“Employers have also stepped up to provide more robust employee assistance programs (EAPs), which include pandemic-friendly options like telemedicine,” Benner added.

Technology to the Rescue

Far beyond the growing reliance on telemedicine, technology is emerging as a promising tool for supporting those with mental health concerns.

Today’s mental health apps perform a variety of functions, including:

Managing medications
Teaching coping skills, such as meditation and relaxation
Predicting when someone may need more emotional help
Help users manage symptoms
Help users overcome anxiety, depression, post-traumatic stress disorder (PTSD), or insomnia

Because interventions are most effective when people like them enough to use them, developers of behavioral health apps are enlisting the help of software engineers to make mental health apps easy and engaging.

According to NIMH, while the apps are becoming more appealing and user-friendly, there still isn’t a lot of information on their effectiveness. NIMH and forward-thinking health care agents are closely watching the following trends in apps being developed to improve mental health.

A wide variety of mental health apps are emerging, including:

Self-Management Apps
Apps for Improving Thinking Skills
Skill-Training Apps
Illness Management and Supported Care
Passive Symptom Tracking
Data Collection

How Can You Help?

Are you ready to take mental health support to the next level for the injured workers in your world? We can help you take the first step. In our experience, a little compassion goes a long way. That is why we have built mental health awareness into our case management solutions as a standard best practice. Our nurse case managers are trained to listen for red flags and proactively provide targeted resources as mental health concerns emerge.

To learn more, start a conversation with us today. In the meantime, explore the resources available online at CDC, NIMH, and maybe even the app store on your mobile device. And stay tuned to see what’s next as we chart these troubled times.

About EK Health Services, Inc.
As a leading national managed care company specializing in workers’ compensation, EK Health Services, Inc. sets the gold standard for medical case management, utilization review, medical bill review, network management, and Medicare Set-Asides. We provide the best people, processes, and technology to facilitate expedient, quality and cost-efficient medical treatment for workers’ compensation claims. Learn more about EK Health’s solutions at www.ekhealth.com.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with EK Health Services, Inc. The editorial staff of Risk & Insurance had no role in its preparation.

As a leading national managed care company, EK Health Services, Inc. sets the gold standard for medical case management, utilization review, medical bill review, network management, and Medicare Set-Asides. We facilitate quality, cost-efficient medical treatment for workers' compensation claims.

How a Carrier Partner Can Help Navigate a Challenging Management and Professional Liability Market

A combination of a choppy economy with increased claims frequency and severity could lead to rate increases in the Management & Professional Liability market.

Rates in the management & professional liability (M&PL) markets were on the rise from 2020 to early 2023 and are now falling rapidly.

M&PL divisions manage a number of different insurance products including management liability (D&O), professional liability (E&O), employment practices liability (EPL), fiduciary liability policies, cyber, etc. In 2023 and into 2024, a big influence on the marketplace has been the extremely aggressive and softening public company D&O market.

Though these rates have been softening for management liability, that may change over the next few years as companies continue to adjust their business models motivated by economic uncertainty. Layoffs were up nearly 200% last year, Forbes reported, even as other recession indicators, like the inflation rate, improved. A recession could lead to an increased claim activity and force carriers to raise rates.

“Whenever there is a meaningful downturn in the economy, we tend to see claim frequency pop up,” said George Schalick, Jr., senior vice president of the Management and Professional Liability Division at Philadelphia Insurance Companies (PHLY).

With continued fiscal uncertainty, businesses potentially already burdened with pandemic-related claims should seek a carrier with a long history in M&PL products. They will provide much-needed risk management guidance and be better positioned to support their insureds during market fluctuations.

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.

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