The majority of claims in workers’ compensation are not litigated, and the system works as it should — as an exclusive remedy for employers and workers in which employees receive the reasonable and necessary care they deserve in a timely fashion.

However, when cases get to the courts, the consequences for both parties can be significant, both monetarily and temporally. For risk managers with a keen eye toward results, the old adage “the only good claim is a closed claim” has significant bearing on how they strategically manage a team of litigators on both a per claim and holistic basis. For many, the growth of data-based decision-making tools is the key to ensuring a positive result.

The Adjuster’s Role

Managing the adjuster’s role it pivotal to understanding how to pursue a broader litigation strategy in worker’s comp. During the claims litigation process, risk managers need to understand what the defense counsel is working toward and how it fits in with the organization’s broader priorities.

“What risk managers find useful is understanding the outcomes defense counsel is achieving,” said Mark Delew, VP, consultative analytics, Broadspire. “Are they achieving good settlement and speed to settlement? And does that outcome align with the risk manager’s strategy or philosophy?”

These questions are essential to the adjuster’s role in the larger organizational priorities; that is, managing the disparate needs of the injured worker, their organization, and those vendors that serve the claim on either side. However, once claims are litigated, that role becomes exponentially more complicated.

At any given time, a claims adjuster might be directly managing hundreds of thousands of dollars in pending legal reserves.

“The best advice is for the adjuster to not only be an active consumer of an attorney’s legal services, but also an active business manager of the legal spend under their purview, said Nick Webber, AVP litigation at AmTrust Financial.

“This means adjusters should always engage attorneys on why the offered legal service and strategy are in the interest of the policyholder and make the most economic sense within the context of the case being discussed.

“Cost-benefit analysis of every major action, including timing of settlement, should be at the forefront of communication between the adjuster and attorney. Stale litigation management guidelines should be revisited to ensure expectations are built around this concept,” he continued.

Experienced claims managers advocate fostering a combination of qualitative and quantitative assessment skills to recognize those stale litigation techniques, and the stakes are high if they fail to do so. A recent Workers’ Compensation Research Institute (WCRI) study of almost a million claims originating across 31 states found that claims with more than seven days lost time were impacted heavily by attorney involvement — to the tune of an additional $7,700 in indemnity paid per claim for the 34% that were represented out of the total sample size.

Perhaps unsurprisingly, the same study found that the severity of the injury played heavily into the overall likelihood of attorney involvement and indemnity paid.

A full 61% of neuropathic pain claims, already difficult to parse for causality, had attorney involvement and average indemnity paid topped $40,000 in those cases. Given that, and especially for complex diagnoses and circumstances, some tenants of legal management are gold plated.

“Early assessment is vital to determine whether legal counsel is necessary, especially for complex issues that exceed [adjusters’] capabilities,” said Ed Burtnette, CorVel vice president of national liability claims. “It’s recommended to request an initial defense analysis and budget within 30 days of referral, ensuring that the attorney’s assessment and recommendations are clearly outlined.”

After this referral, constant monitoring should be the norm. Burtnette said at a minimum monthly communication with defense counsel, “particularly during active litigation periods.”

Metrics, Data and Review

Tantamount to monitoring is data analysis and review. Experts agree that metrics, not necessarily long-standing relationships, are the key to performance.

“It’s crucial for any organization to be prepared to end relationships with firms that are underperforming or possibly exploiting the partnership,” Webber said, in reference to the wealth of trend data now available to claims professionals.

“Equally important is maintaining highly transparent processes to ensure that the remaining firms continue to succeed and understand the implications if their performance declines.”

Once coupled in litigation, adjusters also retain the responsibility for understanding the case and acting as a partner when problems arise and to ensure communication goes through the proper channels. “Activities that are not specifically required to be completed by counsel should remain the responsibility of the adjuster to complete,” said Jeff Gurtcheff, CorVel’s chief vlaims officer.

Ultimately, the attorney’s success is measured based on claim impact, and risk managers in the know are continuously improving their impact assessment methodologies. “For example, we look at the value of the claim the day that litigation starts happening, total incurred and total paid, and we then track the development of that claim from day zero until it resolves,” Delew said.

“We’re looking at the incurred development from the beginning of litigation to the resolution of the case, along with the development of legal expense, and the claim duration – how quickly the— attorney can move that case to resolution once they get involved.”

Broadspire also privileges jurisdictional differences in its model to account for the vastly different litigation landscape in say, California versus Iowa. Additionally, Delew noted the more simplistic approaches aren’t sufficient to capture the outcomes data he’s looking for; it’s not all about the hard numbers.

“I’ve seen the average settlement amount and the total or average duration of time the case is open, but these approaches can fail to level set variation between claims,” he explained. “Sometimes a claim will come into litigation on day one, and sometimes it will be much later on; so, if you’re just looking at the final outcome of the claim you’re failing to level set for that variation.”

Delew’s method involves the adjusters along the way to add color to that outcome picture: “Not only do we provide the overall claim impact to our risk managers, but we also track adjuster experience with those defense attorneys via feedback surveys.”

He explained that when a litigated claim closes, a questionnaire pops up asking the adjuster a few short questions about their experience with the attorney.

“Therefore, it’s not just the financials, it’s also the experience — responsiveness, strategy, communication — that we quantify and include in our assessments,” Delew said.

“This tells a comprehensive story that the risk manager can use to have an important conversation with the attorney or select the right attorney for them.”

Data-driven From the Start

While communication style and frequency preferences, legal and jurisdictional literacy, and caseloads vary from adjuster to adjuster, claims teams should remember that data-driven decisions do not begin and end with their goals in the courtroom.

“I believe that accurate, objective data can bridge the gap between plaintiff and defense counsel,” said Craig Deneau, vice president, payer partnership at FIGUR8, a company focused on biomechanics data for musculoskeletal injuries.

“Both sides tend to manipulate information to benefit their side. By offering one single source of truth, we can assist in reducing the legal headaches and delays that are inherent when attorneys become involved.”

Devastating injuries, and even minor injuries, are a huge disruption in the life of an injured worker.

To avoid managing litigation in the first place, claims professionals know that empathy and honesty are the best policy and help to avoid the opacity of decision making that often leads injured workers to an attorney’s office. &