Risk & Insurance

July 24, 2013

Managing workers' compensation claims imposes a constant test of personal judgment, team skills and support systems. But the conventional image of a person at the center of this function, the claims adjuster, portrays a rules-bound, beleaguered worker of marginal professional stature.

This role or image conflict seems ever more peculiar today as technology empowers claims adjusters to better predict, coordinate and affect claims results. The professional status of adjusters should be higher than it is.

I discussed the traits of a top claims worker with Wayne Salen, the leader of the claims document team of the Standards and Practices Committee of the Risk & Insurance Management Society. Salen is former director of risk management at Labor Finders International, Inc. The temporary staffing firm fields some 16,000 workers a day, for mostly average or above-average injury risk worksites. Salen has contracted with a range of claims vendors over the years.

Our phone call revealed demarcations between professional and less-than-professional claims environments. Claims executives behave in ways that can impact the environment, and their staff's careers.

One of those factors is measurement agility. It is remarkable how one's professional image can grow by adding nuance in analysis while making the summary clearer.Herein is a lesson for claims leaders.

Typically, TPAs when pitching business, talk about staffing targets, such as 100 open lost-time claims per adjuster. The TPA and the prospect implicitly agree that the ratio reliably compares claims organizations.

But this doesn't make sense, given the huge variances in technology capability and in how claims staffs use nurses, claims intake, and other resources. Some claims systems, Salen noted, are so proficient that "You can really pare the human element down with the system making decisions." When he evaluates a TPA, he focuses first on service design and postpones talking about the staffing ratio until the end.

In another over-used measurement practice, TPAs tend to accept from discount-driven medical provider networks "savings" reports. But medical savings and reduction in duration of disability are more closely related to the quality of the medical provider, not to discounts. These discount "savings" reports are bad analysis driving out good analysis.The claims leader who is reluctant to address quality of provider sends a signal about the professionalism of her or his enterprise.

Another factor is adjuster discretion. Salen took pains to praise the "empowerment" of the individual adjuster, who does not always have to get approvals from layers of supervisors to depart from guidelines. For instance, an experienced adjuster should be able to adjust a reserve as part of a strategy to work the claim to a desired end.

Attention to the customer is another factor. Employers want to learn about claims in an employer-focused way.

One of the big changes in the past five or 10 years, Salen said, is the ability of claims systems to automatically produce for an employer's operating units clear reports. A good summary delivered without lag time is invaluable, yet he noted that only a couple of TPAs and insurers produce these automatically, without having to be asked.

Each of the above factors characterize a claims organization's internal proficiency and its capacity to anticipate the external world. That's professionalism, viewed inside and out.

Workers compensation claims adjustors handle a tremendous amount of claims at a time. The number of claims handled by a single adjustor can exceed hundreds of claims at a given time. Like with any job, if you have too much on your plate, it's hard to be keep a good handle on things. Certainly many adjustors are having a hard time giving the proper attention to each individual claim file and as a result many claims are neglected, leading to significant overcharges to an employer's workers compensation policy. Apex Services reviews your current and prior workers compensation policies on a contingency basis to identify these errors and recover refunds for employers. Either we'll get you a refund from your insurance companies or you'll know that you haven't been overcharged. Apex Services workers compensation premium recovery service is a win-win!

July 11, 2013

New York Liquidation Bureau

New York Superintendent of Financial Services Benjamin M. Lawksy has been appointed ancillary receiver of Ullico Casualty Company, according to an order approved by The New York County Supreme Court.

The company, which was domiciled in Delaware, was seized by Delaware regulators in March and as it had a negative surplus of $52 million and accrued $380 million in liabilities against assets of roughly $327 million.

Employers who had been insured by Ullico at some point can safely assume that their claims were not handled in the best manner possible. The mishandling of claims by insurance carriers can lead to thousands of dollars in overcharges in workers compensation insurance costs. Even though Ullico may not be able to return workers comp premiums, subsequent insurance companies that you placed your policy with used Ullico's claim experience to determine your premiums. This claims experience can be reduced and you can obtain workers compensation refunds if you act now.

Business Insurance

April 15, 2013

Former New York Giants linebacker Marcus Buckley and a Gallagher Bassett Services Inc. workers compensation adjuster allegedly schemed to defraud the third-party administrator out of more than $1.5 million, an indictment states.

Mr. Buckley played with the Giants from 1993 to 2000, then played for the Atlanta Falcons for one season. During the time he played with the Giants, the team purchased workers comp insurance from Pennsylvania Manufacturers Association Insurance Group, according to the grand jury indictment filed April 10.

PMA contracted with Gallagher Bassett for third-party administration services, states the indictment filed in the U.S. District Court for the Eastern District of California in Sacramento.

The indictment charges Mr. Buckley and Kimberly Jones with wire fraud and Mr. Jones with money laundering.

It states that Mr. Buckley filed a workers comp claim in 2006 for cumulative stress injuries sustained in California.

But he allegedly requested reimbursements for fictitious medical expenses he didn't incur while a senior claims representative for Gallagher Bassett allegedly requested checks for Mr. Buckley even though she knew evidence was lacking that the medical services had been provided.

The adjuster also schemed to thwart the detection of fraud, the indictment alleges.

Workers compenstaion fraud cases are one of many instances where an employer's experience is wrongly reflected and thereby causes the employer to end up paying overcharges on their workers compensation insurance. When we review your workers comp policies, we are always mindful to look for fraudulent claims and have the insurance company correct them so your experience modification is reflected correctly. This is just one of the ways that workers compensation premium recovery offers to get you back refunds on your old policies and make sure that you have the best underwriting profile upon renewal.

March 11, 2013

New York Governor Andrew Cuomo in January during his state of the state address announced Workers Comp reform as part of his 2013-2014 fiscal year budget proposal. Immediately after the reforms were announced, industry groups, including the Property Casualty Insurers Association of America (PCI) and the American Insurance Association (AIA), and the National Association of Mutual Insurance Companies (NAMIC), came out in support of the reforms, describing them as common sense.

Cuomo’s proposals include transferring $1.75 billion of the New York State Insurance Fund (NYSIF) reserves to the state coffers. This includes a $750 million transfer from the insurance fund in his budget proposal for the coming year. Another $1 billion would be taken from the fund as part of the state's budgets in 2014 and 2015. This massive transfer of funds raises big questions that are unanswered at this point about the state fund’s ability to pay an estimated $3 billion in unfunded workers compensation claims in the coming years made by state employees for which NYSIF paid benefits but never received reimbursement from the state.  The governor’s office argues that approximately $2 billion held in reserves by NYSIF to pay assessments as a percentage of losses to the State Workers Compensation Board will no longer be needed. NYSIF will start paying assessments based on a percentage of premium like all the other workers compensation carriers in the state. 

The proposed reform to require the State Insurance Fund to start paying assessments to the state Workers Compensation Board based on a percentage of premium is a major win for employers. Up until now, the State Insurance Fund has had a major competitive advantage over private carriers in New York. Under this new reform, it appears that the State Insurance Fund is going to be paying the same assessments as private carriers. This is good for employers because they now have the option of choosing from a broader selection of carriers with competitive pricing.

Cuomo also proposes to simplify and rationalize the assessment mechanism for the workers’ compensation system; employers would be assessed on their pro-rata share of premiums, regardless of how they secure their workers’ compensation coverage. This would combine all five of New York State Workers' Compensation Board's assessments on employers into a single assessment, saving carriers a lot of money in administrative costs as they will not have to deal with so many invoices and paying so many different assessments to so many different places. It appears that the Workers Compensation Board is currently sending out 14 different invoices each year to collect the assessments, some of which are billed quarterly. Hopefully, carriers will pass down these savings to employers.

The proposed reforms will also repeal a statute that requires insurers to make contributions to the Aggregate Trust Fund to cover future indemnity benefits when a claimant receives a permanent disability rating. This would greatly benefit insurance carriers as it would mean much more cash left in their bank account while they pay out the claims, helping to keep them more solvent. It would also be good for employers because this increases the possibility of making a settlement.

Cuomo’s proposal also includes increasing the minimum weekly benefit for injured claimants from $100 to $150. This increase is definitely not good for insurance companies or employers. In fact, former New York Governor Spitzer, as part of his 2007 reform, raised the maximum weekly benefits which previously were capped for years at $400 a week. Today, thanks to Spitzer’s increases, the average weekly benefits are now capped at $792.  What this means is that you have employees who make more money being more motivated to go out of work and remain out of work. Even if the employee never stayed out of work but just received a settlement for, let’s say, an injury to an extremity of their body, before the 2007 reform the amount would have been somewhere around $12,500; now they would be receiving about $25,000 due to the maximum weekly benefit increase in 2007, which has significantly added to the cost of workers comp in New York. In fact, recently I was speaking to an insurance company executive about the increase in 2007. He felt that that the only thing that prevented the system from suffering on an even greater scale from this change was a bad economy with very few jobs available. Fewer people were willing to risk being out of work and losing their jobs. However, basically, when offering people more money, some unfortunately tend to abuse the system.

The proposal also includes issuing bonds to cover the $800 million in liabilities of the self-insured group trusts. This is good news for employers as this would appear to put less financial responsibility on employers that were insured with trusts and shift a good portion of the hefty bills to the state.

What’s more, the proposed reform also calls for closing the Reopened Case Fund, which is a fund that is activated when a claim reopens at least seven years after the work-related accident and three years since the last payment or award of lost wages. This is bad for employers and insurance companies because they were able to pay less for these claims. Furthermore, employers will probably not see any savings for the next several years from this fund’s closure. Currently, employers in New York are paying a 4.9% assessment for this fund but as there will still be many claims to administer, this assessment will probably not decrease significantly any time soon. The same holds true for the second injury fund whose assessment still remains at 9.6% despite closing down the fund in 2007. It wouldn’t be surprising if the second injury fund assessment stays high for close to another 10 years or more. 

The fact remains that since the 2007 Workers Compensation Reform Act, which attempted to reduce the costs for employers in the State of New York, rates have gone up. Prior to the passing of the Reform Act in 2007, assessments stood at 18.6%; now, they are 18.8%. 

Governor Cuomo says his aim with the proposal is to lower costs and save the state and New York employers $1.3 billion, but he did not provide any details for that estimate. Therefore, our evaluations are based on the information we currently have. There definitely seems to be some positive changes that all parties will benefit from and be happy with, but the question still remains: How will Governor Cuomo’s changes show long systemic growth?

No matter what, the facts show that currently New York’s 18.8% assessment surcharges are the highest in the nation, with the average assessment surcharges nationwide at 3.8%. Ultimately, these reforms bode well for employers as the market becomes more competitive. However, as costs continue to rise, employers should continue to do everything they can to reduce costs because no matter what insurance carrier you're with, errors and overcharges will continue to happen.

About Apex Services

Apex Services offers employers the quickest, easiest, and most effective solutions to reduce workers compensation costs with its workers compensation premium recovery program. Apex obtains credits and refunds on current and prior years’ workers compensation policies and provides employers with a better underwriting profile to enter the renewal marketplace. For more information about Apex, you can contact Simon at 888-380-2739 or email him at simon@apexservices.com. You can also visit www.apexservices.com.

February 5, 2013

Check out our new video on obtaining workers compensation audit refunds.