Subrogation – The Silent Workers Comp Premium Refund
A Workers Comp premium refund that no one talks about is subrogation. I have posted on subrogation in the past. I would re-post the standard definition for subrogation, but it is one of the most confusing definitions in all of Worker’s Compensation.
My definition of subrogation is when there is another party besides the employer that was partially or fully responsible for the incident occurring to the employee. Workers Comp adjusters sometimes overlook the possibility of recovering part of the claim payouts using subrogation.
Why would this occur? A Worker’s Compensation adjuster is not a liability adjuster and may only be trained to handle Workers’ Compensation. General or auto liability is a totally different segment of the insurance world and the Workers Comp adjuster may not be trained in the intricacies of liability other than Workers Compensation.
If the subrogation recoveries occur within six years after the accident, the money should be credited back against the file. The correction should require recalculation of the E-Mod and a refund of premiums. Sometimes, the money will be recovered by the insurance carrier and credited against the file. However, there are a few steps that are required to result in a premium refund. This is a somewhat complicated set of steps that will likely recover some of the overpaid premiums on that specific file.
What should your company do if there is a possibility of recovering some of the funds paid out on one or many Workers Comp files? Your company should inform the adjuster when the claim is reported. Some type of diary system should be instituted to track the subrogation claim. One of the main things to look for at the start of the process is a letter from the adjuster to the third party putting them on notice. Without this letter, your subrogation claim will be deemed worthless.
Subrogation takes a large amount of patience. Your company’s efforts will pay off in the long run. If you feel that the subrogation claim is becoming too complicated or the carrier is not pursuing the third party enough to recover funds, it may be in your company’s best interests to bring in a consultant to help with the subrogation claim.
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