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Ethics In Workers Compensation Claims And Modified 80-20 Rule

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Ethics In Workers Compensation Claims – Does It Exist?

Ethics in the Workers Compensation claims arena has increased over the years.  Last week, I had the privilege of attending the 3rd Quarterly Meeting of NC PRIMA in Winston-Salem, NC.   If you are in the public risk sector in North Carolina, you are definitely missing out by not being a member.   The other PRIMA chapters can be found here.

Picture Of Business Meeting Workers Compensation Claims With Colleagues
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The law offices of Cranfill, Sumner and Hartzog  (CSH) presented at the meeting.  The topic was Ethics in Workers Compensation.    Overall, the presentations were very informative.  CSH is one of the premiere Workers Comp defense firms in North Carolina.

Over the weekend, I read some type of innocuous article on the 80-20 rule as it applies in science experiments.   I then thought that the 80-20 rule does apply to Workers Compensation ethics.

In most of my career in insurance, I have always noticed that 80% of the Workers Compensation personnel are trustworthy, forthright, and  very ethical.   The other 20% are another matter.   I would never say the other 20% are unethical all of the time.  The phrase “hit and miss” would apply in these cases.

The 20% to which I am referring are not unethical ALL of the time.  I will coin the term spot-ethics or almost always ethical except in certain instances.   The spot-ethics are sometimes fostered by the TPA (Third Party Administrator) or insurance company office.

Woman Workers Compensation Claims Raising Hand To Ask Question In Meeitng
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Some of the questions that ran through my mind after the CSH presentation were:
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  • Should an adjuster deny a claim just to settle the file for a cheaper amount later than paying all benefits upfront?
  • Should adjusters alter forms that were signed by the injured employee just to make sure they will be approved by the WC regulatory board or commission as long as they do not affect the amount of benefits payable?
  • Does the adjuster use the same guide each time when taking recorded statements?
  • If an adjuster skips a check by mistake, should they blame the mail, and then issue a check that was never issued in the first place?
  • Should the oldest medical bills be paid first and not on an ad-hoc basis?
  • Is the file documented with clear concise notes that are not handwritten?
  • Is over-reserving or under-reserving a file unethical?
  • Is an adjuster considered unethical if they accidentally make a mistake?

After pondering whether or not most claims personnel are ethical, I would have to say that the 20% was somewhat extreme.  My assessment is that 5% of claims personnel are unethical at some point in their career.  This does not mean they are unethical from day one.    Are the questions I posed really a question of ethics?  Some of them are – others are not. 

Picture Of Managers Workers Compensation Claims On Chair
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 CSH had a great list of ethical considerations for adjusters and risk managers that apply to any state:

  • Encourage prompt reporting of injuries
  • Act with a sense of urgency
  • Complete a prompt and thorough investigation
  • Have a legitimate and arguable basis for any denial
  • Competent and objective professionalism
  • Document notes completely and objectively
  • Authorize medical treatment timely

This was a partial list.   If you want to read further on my opinion of the job of Workers Comp adjusting, check out my articles on Workers Comp ethics and adjusters.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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