We provide expert witness services, within our areas of expertise, and it’s a big part of what our firm does. Unfortunately, our expert witness services often come at the end of a bitter, unresolved disagreement between an employer and their workers compensation insurance company that’s finally ended up in court. You never know, we may be representing the employer or the insurance company!
Litigation is an expensive resolution to many workers comp disputes and in this post I want to talk a bit about where litigation fits in the overall dispute process. And to try and answer the question “Do I need to get an attorney?”
It’s a question we are asked quite often. Usually after the workers comp system has stifled, at every turn, an employers attempt to have a problem resolved. These problems may consist of everything from a claim problem or disagreement with classification codes, retrospective rating problems or a problem stemming from an employers experience modification rate or EMR. Regardless the original source of the disagreement, frustration and a sense of helplessness, experienced by an employer, will usually end up with a phone call to their attorney. A call for help. A call for direction.
Believe it or not, there’s not that many attorney’s out there that have the experience to work through a workers compensation administrative issue. Sure, there are plenty of litigation experts out there when it comes to suing for a claims related problem experienced by an employee. But just try to find an attorney with experience in workers compensation classification codes or audit or retrospective rating or just about any other premium producing portion of the workers comp conundrum. We’re lucky. We continue to have the pleasure of working with some of the best!
Why has our industry (insurance) let these folks down? I’d hate to answer this question with something as trite as it’s all about the money. But I’m often hard pressed to explain it any other way.
Problems between a policyholder (employer) and their workers compensation insurance company almost always come about from some misunderstanding. Audits, claims, classification codes, re-classification of employees into higher rated codes, all have the potential to blow up into a major dispute. Small disputes continue to be settled between the warring parties in some low level discussions on a regular basis. For example when an employer has been assigned to a clearly wrong class code you’ll almost never have a problem getting it corrected. These types of problems can often be corrected at the insurance company underwriting level. But don’t fool yourself! Just add a few zeros behind the problematic premium and all of a sudden the decision to make a correction is no longer in the hands of the underwriter. Don’t be surprised if the matter has been moved up the management tree at the insurance company. And if the numbers are large enough you’ll certainly find the insurance company legal team in the mix.
At this point you should be asking about the existence of dispute resolution processes. I should be hearing questions like, “Isn’t there a process in place to resolve these workers compensation disputes?” In fact every State will have their own process as to how these disputes are to be heard and decided. Most dispute resolution process rules will require or at least include some of these:
- An attempt to settle the dispute directly with the insurance carrier;
- Identification and payment of all outstanding premium not effected by the dispute;
- When direct negotiation with the insurance company does not work then move the dispute to the next level;
- Next resolution level will probably be with some State sponsored committee or review board;
- When the dispute committee of review board fails then move the dispute to the next level;
- Next resolution level may be with some State authority such as the Director of Insurance or other as directed by the individual state process;
At this point you should understand that there are two viable ways of resolving problems. They are:
- Negotiating some type of settlement with the insurance company and
- Following some organized state approved resolution process.
You should know a few things:
- Insurance companies often will not negotiate with you. This depends on the specific issue at hand. Ask yourself, “what’s in it for them?” For example, as mentioned above, if the problem is a clear mistake the insurance company made in, let’s say, classification then they may make an adjustment in your favor. If there’s a disagreement in the interpretation of some rule or if you are in disagreement regarding a gray area of classification you will find the insurance company will not be in the mood of negotiating away any premium they believe they are owed!
- Organized dispute resolution processes are only as good at the authority the deciding committee or board has been given by statute. In other words, if the reviewing board or committee does not have binding authority provided by the state to make decisions that must be followed, then the parties involved in the dispute (the policyholder and insurance company) may just chose to ignore the outcome. How’s that possible?? We’ve seen it happen where an insurance company and rating authority ignored a directive given to them by a state workers compensation review board. Sure doesn’t seem right but it happens.
You may follow all the rules outlined in a dispute process. You may even secure a favorable outcome by some state dispute board or review committee only to find yourself faced with litigation.
So, do you need an attorney? Maybe.
Here’s a few points to consider:
- Have you consulted with a workers compensation consultant regarding your problem?
- Have you exhausted your options of direct negotiation with the insurance company?
- Have you exhausted your options through your states dispute resolution process?
- Does your problem still exist and are you on firm ground for moving forward?
Experience says that if you’re problem involves a large premium dispute the insurance company will not just give up! Here’s where I reinforce the part where if there’s enough money involved in the dispute, you’re probably not going to avoid litigation.
The idea behind this concept is a bit disturbing. It has to do with the David and Goliath factor. That’s where the insurance company is a money making machine with legal resources and deep pockets. They can afford to pursue filing suit and taking things to court when they like. You know, Goliath.
A small employer will not have the means to fight against the full force of Goliath. And that’s where they must rely on the individual states to provide consumer protection. And, unfortunately, there are often holes in those remedies, as we pointed out above.
The bottom line is that, under certain circumstances, workers compensation disputes will end up in court. It’s just a fact.
Hope this post helps you out! And thanks for reading!