It was one of the more controversial suggestions to come out of a recent Hot Seat Webinar that was held July 9th. The topic was “Delays in Treatment for Compensable Workers’ Comp Claims,” and the guests joining Judge David Langham and myself were Kentucky Commissioner Bob Swisher and Florida attorney Rosemary Eure. Much of the conversation had centered on the failure of communication in the claims process, which led to discussions regarding the often-impossible caseload’s that some adjusters routinely have on their desk. It was at this point that one of the viewers made an interesting comment on the webinar chat board.

It simply said, “Caseload caps!” 

To be certain, the number of cases that some adjusters are routinely forced to take on can be obscene. We’ve heard of situations in some claim’s operations where 200 or 250 open files at any given time are the norm. One carrier I know of had a casefile load of 300 for their claims professionals to juggle. At those stratospheric levels most reasonable people would have to admit that adjusters are doing anything but managing claims. They are merely putting out fires.

This is completely counter to the growing push for advocacy-based claims, and a genuine effort to improve outcomes through a more holistic approach in dealing with injured workers. There is mounting real life evidence showing companies that lower caseloads and empower qualified claims people are getting improved outcomes and shorter injury durations. They are also seeing less friction and lower litigation rates in the process. This means that the cost of these claims is actually lower than for those trapped in these high file claims management sweatshops. 

I am not a big government guy, and generally eschew over-regulation. It is not inconceivable, however, in a world where many states already maintain licensing and residency requirements for workers’ compensation claims adjusters, to see a situation where those same entities could easily mandate caseload caps. It would be a way to force an industry into compliance with improved management methods when some simply refuse to do it on their own.

I’ve come across a few firms that seem to get this. I once spoke with the VP of Claims for a 9-state insurer based in the west. They had reduced their adjuster caseload to a very manageable 65 and had seen their litigation rates in California drop by more than 60%. There is a small mid-western claims operation that maintains an “old school” management mentality with a low per adjuster file rate. Their litigation rate is so low as to be almost non-existent. So, the natural question would be, “if lower caseloads are not only more effective but can lower costs, why isn’t it happening organically?” 

I am so glad you asked.

There are a number of reasons that we cling to these outdated standards. One reason that really sticks out is that, for some decision makers in the industry, the claims operation is simply an expense line on the budget and is treated as such. It produces no revenue, and therefore is not given the priority it should have within the operation. In my opinion that is foolish thinking. The claims operation is the front line in customer service at the most critical point of a business relationship. A strong and effective claims department should be viewed as an asset rather than a liability.

Another reason that the lower caseload theory has not taken off is that our industry is slow to embrace new concepts and ideas, and there is a very strong tendency to “stick with what we know.” The evolution of claims over the last 30 plus years has been one of heavy centralization and consolidation, which has resulted in the weakening of both training and authority for today’s claims professional. This has led to increasing reliance on third party operations designed to perform functions that at one time were done by the adjustors themselves. And that leads us to perhaps the most insidious reason that this remains an issue. 

There is money to be made in the churn. 

Longer claim durations and increased process can mean more profit for the companies providing the services as well as the administration firms who may have transactional revenue built into their contracts. This creates a negative incentive to doing what is right for both the injured worker and their employer. Some people choose to do what is profitable over what is right.

I’m a good capitalist and think profit is a good thing, but when it comes to harming people’s lives for fun and profit, I kind of draw the line on that one. We can do better.

Employers, who ultimately pick up the entire tab, should be more cognizant of how their money is being spent. Self-insureds should inquire as to what the current caseload of their TPA’s adjusters are. I would go so far as to say they should require that caseloads for adjustors handling their employees do not exceed a set parameter. They will save money and their employees will get better treatment as a result.

Recognizing that the complexity of claims can vary widely, it would be best for the workers’ compensation industry to fix this on its own. Med-only claims are not as complex and do not require as much attention as catastrophic injury cases, and they should be subject to different standards. Another suggestion made during the Hot Seat program was that we could and should develop a set of “best practices” in this area (more on that later this week). I would prefer to see the workers’ comp industry address and correct the caseload issue on its own. However, if we are unable to accomplish this, the regulators may be the final solution. It is not outside the realm of possibility that a jurisdiction could mandate caseload caps for the industry. They won’t have the accuracy or finesse of an industry developed solution, but it would likely go a long way in accomplishing the caseload conundrum.

But it would be better if we could accomplish that on our own.


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