WCRI credits much of the decline to the speed at which carriers in the state make their first payment of indemnity.
"What drives injured workers into the arms of attorneys is not getting paid on time," Lynch said. "They have families to support and mortgages to pay, and most of them are living paycheck to paycheck.
I have heard many times in the past from many different system participants that attorneys are to blame for increased costs in workers' compensation and that they need to be removed from the system.
Of course, being an attorney myself, I respond with irrefutable competing logic - accountants and tax preparation specialists add significantly to the cost of paying taxes, yet no one calls for their removal.
And that is because attorneys are not the CAUSE of increased costs in the system. Lawyer participation is simply a symptom.
Sure, there are some lawyers that are going to take advantage of a situation such as a work injury and prey on the uninformed or those seeking redress for a perceived wrong. Heck, you see them advertise right on this blog through their Google Ads accounts.
But for the most part, injured workers get drawn to lawyer participation due to one of two simple reasons: 1) the system and accompanying paperwork is complex and frightening (how many state forms have you seen that warn the injured worker of "losing rights" if they don't do something by a certain time?); 2) someone didn't get paid on time when they felt they should have and, as Lynch noted, there's a mortgage or rent payment coming up.
In yesterday's news, it was reported that Peggy Sugarman, former chief deputy administrative director of the California Division of Workers’ Compensation, has taken over as the director of workers’ compensation for the City and County of San Francisco.
Sugarman said she believes one key to running a successful workers’ compensation program is good communications with injured workers. Employers have the ability to create their own notification letters, provided they include information that is required by the state, and in doing so can better explain how the claim process works.
“There are a lot of opportunities to improve communications, and I think as a result, litigation goes down and claims go faster,” she said.
I agree with Sugarman.
In "the good old days" (not) when I was a practicing defense attorney assigned to an injured worker's deposition I would always ask what drove them to see an attorney.
More often than not the answer was that the person got these frightening notices in the mail from the carrier/administrator that warned of dire consequences if they didn't do something - even though these notices stressed that they didn't need an attorney to represent them.
Nevertheless, these unfortunate folks would be attracted to see an attorney either because of poor reading and language skills, or because the information these forms communicated was difficult and complex (and, I might add, voluminous).
These folks, living on the edge of financial ruin - as Lynch noted, paycheck to paycheck - can't afford to pay an attorney for advice, and indeed, many state laws prohibit an attorney from charging an injured worker directly for representation or advise in work comp cases.
In order for an injured worker to get information satisfaction, they see the attorney. In order for the attorney to get paid, the attorney takes the case, takes on representation, and the litigation cycle starts.
The counter argument is that many states offer ombudsman-like services. In California it is the Information and Assistance Officer. In Texas its the Office of Injured Employee Counsel. These are great services, don't cost the injured worker anything and provide information services that the worker can not get anywhere without some cost.
But there are two problems - these services can not enter into representation of the injured worker, and a lot of folks just don't trust the government to steer them in the right direction. So the value of these services gets discounted by the injured worker and they seek the services of attorneys.
To be sure there is a delicate balance between just paying a claim and making sure that the claim is legitimate. There's no question that it is a difficult job to ensure that claim dollars aren't being thrown down the receptacle.
At the same time it may be more cost effective in the big picture to expedite delivery of indemnity dollars without penalty to the carrier/administrator until a clear investigation points to either acceptance or denial.
WCRI credits some of the cost control success in Massachusetts to expeditious claim payments and claims processing.
"The Massachusetts process of speeding dispute resolution through conciliations and conferences and fast initial indemnity payments might have played a significant role in reducing incentives for attorneys and the need for attorney involvement," WCRI said in the study.
Massachusetts law permits the carrier/administrator to make claim payments for 180 days without admitting to liability.
I think this kind of "amnesty" provision goes a long towards encouraging expeditious indemnity payments in order to curtail a negative reaction on the part of the injured worker (i.e. seeking attorney advise/representation).
California law has a similar provision, but applicable only to medical treatment for the first 90 days and subject to a $10,000 cap. This doesn't prove as effective because while medical treatment is a necessary part of an injured worker's concern, like Lynch noted, the lynch-pin (pun intended) is when that first regularly scheduled big monthly bill comes in the mailbox and there isn't cash to make the payment.
While there are those who are going to perpetrate a fraud regardless of whether a payment is early or late, in my opinion, from the Big Picture perspective, it is more cost effective to pay now, investigate later - those who are not legitimate will be prosecuted and those who would otherwise seek attorney services won't.
There is no doubt that when an attorney is involved the case value (or cost, depending upon your perspective) increases dramatically - sometimes double or triple what the claim would otherwise have cost (or been valued at). In the meantime, the typical fraud case reflects about ten or fifteen thousand dollars in payments before the fraud is stopped.
I submit there are many, many more legitimate cases where indemnity is slow in coming or denied initially, than there are fraud cases.
Those are the cost drivers.
Those claims need a) clear, easy to understand communication about the process and b) expeditious indemnity payments without penalty to the carrier/administrator in the event a mistake was made.