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Workers Comp Claim Denials Occur More Than You Think

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Workers Comp Claim Denials Happen All The Time – No, Really They Do

Workers Comp claim denials occur rarely nowadays.   Hold on, the title of the article is that workers comp claim denials happen all the time – did I just disagree with my own statement?  No – let us look more closely at the two types of denials.

Pic Swallows Closed To Entry Sign - workers comp claim denials
Public Use – Oregon Department of Fish and Wildlife

Full Claim Denials

I rarely see full claim denials in our claim reviews for clients.  The definition of a full claim denial is when the claims adjuster decides that the claim is not compensable and issues a denial letter or a state-approved form.

With the expansion over the years of what constitutes an on-the-job accident, denials have become a rare bird, to say the least.   Denying a claim is going to involve heavy litigation costs.  The claimant is not going to just go away without seeking legal counsel.

Every claims manual that I have seen in the last 30+ years had a section on workers comp claim denials.  What percentage of full claim denials have I seen in the last 10 years?  I would estimate .3%.

One out of  300 claims (including medical-only claims) is fully denied.   The number is not a hard statistic, but it is very close.

Partial Claim Denials

A trend that I have seen lately in claim reviews is that an injured worker will claim a body part that was never mentioned in the original claim or medical bills are submitted for treatment that was not related to the original claim.  The overall claim had been accepted as compensable.

Some claim systems are sophisticated enough to catch these unrelated medical claims.  Almost no unrelated medical bills end up being paid by the claims department.

The rate of workers comp claim denials that fall under this category approaches at least 5 – 7% of lost time claims. That may seem like a small number.  However, I am looking at $30,000 worth of medical treatment bills on a claim that I reviewed last week for an injury that was not related to the original claim.

The Third Party Administrator’s billing system flagged it and locked the bills from payment until the adjuster reviewed the claim. With the adjuster’s 13 daily duties, expecting them to manually catch unrelated medical treatment seems unrealistic.

Most of the workers comp claim denials originate from what I call parallel medical treatment.  For example, treatment for severe diabetes appears on the same bill as the medical treatment for a low-back injury.

Workers Comp Claims Denials – Fraud Disclaimer

At no time do I think any medical systems are attempting to have non-workers comp medical bills illegally pushed through the system to see if the bill will be paid by the workers’ comp claim department.

The ones I have seen are usually due to unintentional mistakes.

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management 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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