Nebraska Supreme Court Cases
Two days ago, I analyzed a recent court case where the Nebraska Supreme Court Cases made a ruling that can devastate a state’s Workers Comp system.
The conundrum is two-fold for carriers and self-insureds and their Third Party Administrators (TPA’s):
- How do the insurance carriers make up the difference now that a law that will likely be exploited is now “on the books?”
- Can insurance carriers properly adjust files now that there is a cloud of a bad decision on the definition of an accident?
The carriers’ underwriting departments could have in no way anticipated such a momentous decision that may open up the floodgates on past, present, and future denials of claims that were based on the definition of an accident.
If you did not read the article from two days ago in this blog, it may behoove you to look at the article here. The article has links to the decision. Follow this link for the prior bad decision by the Nebraska Supreme Court.
Incurred But Not Reported (IBNR) can only offset so much of a new bucket of claims that may have to be paid or settled due to such a decision. Changing the definition of an accident can alter the underpinnings of how claims are viewed in a state.
Twenty years ago, the large carriers were going to pull out of writing in North Carolina due to an even worse Supreme Court decision. The NC legislature stepped in to quell employers’ and carriers’ concern with legislation that corrected the decision.
Claims adjusters in Nebraska may now have to consider or reconsider claims where the definition of an accident was expanded from a single traumatic incident into an incident that stretched for months or years.
Employers may notice that claims where the definition of an accident comes into play, especially on denials, large increases in Total Incurred which increases an employer’s E-Mod (X-Mod) or LDF if self insured. Adjusters usually react to bad case law on the books by heavily increasing the reserves on a portion of their files that involve an accident definition.
I may sometimes not agree with carriers or TPA’s. However, in this case, when the road-map of underwriting and claims handling change overnight, what is a carrier’s underwriting and claims department going to do in such cases?
The bottom line is the employers in Nebraska could end up paying more premiums and the self insureds could end up with a much large WC budget when the unanticipated is now a fact. Even worse, the employers may soon find fewer carriers writing WC in Nebraska.
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