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5 Steps Every Employer Should Take To Effectively Manage Workers’ Compensation Claims

January 15, 2016

By Denise Elliott

Enacted in 1915, Pennsylvania’s Workers’ Compensation Act was viewed as a “great compromise,” with both sides giving up important safeguards.

In exchange for medical and economic benefits, employees surrender their right to sue for reasons such as pain and suffering or loss of consortium. On the flip side, employers give up defenses with regard to fault. As a no-fault act, even if an employee or his co-worker makes a poor decision and gets hurt, the act still covers him.

Although the Act is over 100 years old, it remains misunderstood and frequently misapplied. Combine the Act with the web of state, federal and private benefits available to injured workers’ and it’s enough to make your head spin!

Knowing the law is critical. Taking the necessary steps to make the workplace safer and to make the law work for employers is also critical. Here are five things every employer needs to know/do to effectively manage workers’ compensation claims:

1. Look at the big picture

Often a company designates a “safety person” to handle its workers’ comp claims. In doing so, the “safety person” may not think about the interplay of workers’ comp with the Family and Medical Leave Act, the Americans with Disabilities Act, Medicaid and Medicare, or unemployment compensation. Workers’ compensation does not exist in a vacuum. It is part of a bigger picture and HR should always be involved in claim management.

2. Don’t rely too heavily on your adjustors

It’s important for employers to understand the basic rules, including provisions regarding investigation, timing, and the bases for denying a claim. Adjustors know the law, but they frequently have hefty caseloads and fail to address related employment law issues. Working with your adjustor to investigate and decide on denial/acceptance and coordinating ancillary medical leave and employment law issues is an absolute BEST PRACTICE!

The Act provides only 21 days to decide whether to accept or deny a claim. That is a small window, especially if you need medical information. You might also need to ask other workers, “Did Bob say his back was hurting last week?” If an acceptance/denial document is not filed within 21 days, most claimant’s attorneys will seek penalties, which can be awarded within the discretion of the WC Judge.

3. Use a nurse case manager

A nurse case manager can bring the doctors, employee, and employer together, on the same page. He or she can reach out to the injured worker and interact with doctors, making the injured worker feel heard and advising the doctor when light duty is available. A nurse case manager can also create job descriptions or short job videotapes for review and approval by the treating and/or IME physicians.

The nurse can keep employees honest, because the nurse knows their physical limitations and the duties of the job and can ensure effective and honest communication with doctors, with accurate reporting back to the employer. Insurers often have nurse case managers on staff, or you can develop a working relationship with a good independent nurse case manager. In “lost time cases,” you should insist that the nurse case manager attend appointments and interact with the physicians directly, rather than taking a more passive “telephonic case management” role.

4. Don’t be too quick or too slow to terminate

Some employers are gun-shy about firing an injured worker, who is pursuing or receiving workers’ comp benefits. Others are too quick to terminate, running the risk of a companion wrongful termination claim. Injured workers can cause headaches and spawn morale issues and employer often question if an employee can be fired “while on workers’ comp”.

Yes, they can, but only after you study your checklist:

  • Is the injured worker FMLA eligible?
  • Does he have 12 weeks of leave coming to him?
  • Do you have supplemental leave plans?

You cannot terminate workers until they have exhausted their statutory and employer provided leave options. Some employers are surprised to learn that these benefits run concurrently with workers comp leave.

Employers should consider the Americans with Disabilities Act (“ADA”). Can you accommodate this person in a reasonable way? The ADA does not require employers to provide leave indefinitely, however, or even to create a light duty position, if it is against the employer’s interests to do so.

Are you terminating for misconduct or a policy violation?  Employees who repeatedly violate attendance policies (and if that noncompliance is unrelated to a work injury) can be fired. Workers can also be disciplined for lateness, excessive absences, failing to meet production goals, drug abuse, safety violations and other policy infractions.

Careful documentation of the alleged violations is of the utmost importance and any termination decision should be made with the input and guidance of counsel, due to the risk of retaliation, ADA, FMLA, UC or other companion claim. An employee who is disgruntled already, due to a bad experience with the WC system, is more likely to sue for ancillary claims.

5. Look for creative solutions

The settlement process, which often includes mandatory mediation, can be used creatively. For example, if your company has an early retirement option, you might structure a settlement so that Jane can retire early and keep her health insurance for some defined period of time. It is also important to negotiate a broad employment release agreement. You do not want to pay out $80,000 and then then get hit with a federal ADA suit or FMLA claim simply because the WC adjuster and safety manager were focused only on the narrow WC issues.

Due to the many factors that go in to a settlement decision, it’s always best to consult an attorney prior to and during litigation and to also attend any voluntary or mandatory mediation with counsel.

The decision as to when to retain legal counsel depends on your comfort level. Some employers call an attorney as soon as a worker is injured, especially if the claim doesn’t pass the smell test. Or they might call when a secondary issue emerges, or when the injured worker files a petition in court.

Certainly when a case hits the litigation phase, you will need sophisticated defense counsel able to address the WC claim and other potential claims that may arise out of the employment relationship. Depending on the size of the employer and the nature of the WC coverage (i.e. self-insurance, large deductible plan, insurance pooling, etc.), you may have the ability to select your legal counsel.

Some carriers push back on this, preferring to use their own “house” or “panel” attorneys, who are often unfamiliar with issues outside of their narrow WC practice area. The time to address this concern is when your policy coverage is changing, or your WC plan is up for renewal. Most carriers with attempt to accommodate specific counsel requests, if the employer client is persistent and the premium dollars are high enough.

Dealing with a workers’ comp claim is complicated, but the process can still be used as it was intended a century ago. While our economy has transformed from the Industrial Revolution to the Information Age, help is still available when work causes a legitimate injury, illness, or disease.

Denise Elliott is a member of the Labor and Employment Practice Group at McNees Wallace & Nurick LLC. She focuses her practice on defending self-insured employers in workers compensation matters and representing clients in employment discrimination litigation, ADA/FMLA compliance, and safety and health issues.


Denise E. Elliott

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Labor and Employment