Workers Comp Subrogation Claim – Very Old Reserves Still Open

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Very Old Workers Comp Subrogation Claim – Loss Run Says Open – Why?

A new blog and newsletter reader asked this question last week after reviewing their Loss Runs – we have a very old workers comp subrogation claim open after seven years – will that affect our Experience Mod – why is it not closed?  

pic of armenian stamp 350k workers comp subro claim
Public Domain – Republic of Armenia

$350,000 Claim Open – Let’s Look at the Why

Many Workers’ Comp carriers leave the claim open as it generates a large number of claim notices that enable the adjuster to track the claim.   When claims are closed, the notices sometimes do not generate and the claim may fall off a diary system very easily.  

Each carrier’s claims department has their own way of handling a large or any workers comp subrogation claim. 

Some of the carriers and TPAs that I have worked for or consulted with all use different methods for tracking the claim.  One TPA even has a subro-open status that closes out the claim but generates internal messages and diaries to follow the claim.

I had written an article that recommends that employers keep their own diaries for subrogation claims.  Checking in on a claim every six months will keep you up to date.   If the claim was due to a motor vehicle accident, always keep a copy of the initial and finalized police report for your records.  

Always email the adjuster, do not call them.  They will appreciate the email instead of a call.  If you do not know the name of the adjuster, most carrier and TPA websites will provide the claims adjuster’s email.   

But then that points out a possible problem, to keep your reserves lower on any set of claims, you should have a working relationship with the workers’ comp claims staff.  Check out this article on how to establish a working relationship. 

Workers Comp Subrogation Claim Units  

US Dollar workers comp subrogation claim banknotes
Public Domain – Milad Mosapoor

On the $350,000 claim, the file has been referred to a specialized subrogation unit in Florida.  You may be dealing with a department than with one adjuster.  That is an Ok situation.  If you see different adjusters responding to your email,  that is acceptable as more than one subrogation adjuster may be working on your file at that point.  

With this large claim amount, attorney representation by all parties may cause the claim to be open for years on end.  The original adjuster that you have been working with may not know the current status.  

Experience Mod Effect (or not)

The Experience Mod effect will usually not have any effect from a claim with no reserves.  The claim is the same as a closed claim – Paid = Total Incurred.   

The Total Incurred is the same.   The Total Incurred is the figure that the carriers report to the rating bureaus that calculated your Mod.

The $350,000 Mod had affected your Experience Mod for the 2017 – 2019 years.   You likely had to pay higher premiums for those years.   

US 20 dollar workers comp subrogation claim bills on hand
Public Domain – Merzperson

But hold on! – if the subrogation recovery unit recovers funds the process is usually:

  • Subro claim recovery 
  • Funds credited back to file
  • Carrier data reporters report the recovery of funds to the rating bureau (NCCI, WCIRB, etc.)
  • Rating bureau recalculates Mod and sends back to the carrier
  • Carrier processes workers comp premium refund

The last bullet point is why I HEAVILY recommend that you establish a diary system to follow the subrogation recovery.   Please see the first link for this article that I wrote on the subject in 2009 – workers comp does not change that much. 

Bottom Line – do not be concerned if a claim is still open that has no outstanding reserves if it is a workers comp subrogation claim.  Build a diary and follow it – use any calendar program.  

 

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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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