Gonna Lawyer Up?

By: Dr. Gary Anderberg

What happens to a workers' compensation claim when the claimant seeks representation or lawyers up? Thirty years ago, when I worked at Travelers, we had a pretty strong opinion about claims with lawyers. They were what a TV commercial of the time called the "high-priced spread." Some 15 years later, I ran research at another claims organization that indicated that when we matched comp claims for major characteristics like age, injury, occupation, and jurisdiction, the cost differential between represented and non-represented claims was modest. The claims with lawyers were open longer but had slightly lower overall medical costs. So, which is it?

The good folks at the Workers' Compensation Research Institute (WCRI) have been taking a good, long look at this question using today's stats, and they reported their conclusions in September. Their study set out to answer two specific questions:

• What is the impact of attorney involvement on the amount of indemnity payments that workers receive after their injuries?
• What impact does attorney involvement have across different injury types, such as fractures, lacerations, contusions, lower back pain cases, inflammations, and non-back sprains and strains?

The full report is available from the WCRI for a modest fee for non-members (you know who you are) and free for members. It's a pretty good read.* Spoiler alert: We're giving away the big plot twists in the next paragraph.

The headline is that, based on a review of some 950,000 claims, attorney involvement increases total indemnity benefits paid by more than $7,700. As always with workers'comp, the results vary significantly by state due to different rules and regulations. The results also vary by the type of injury but not so much across the different industries studied. The study didn't look at the comparative medical costs, just the indemnity benefits paid. My own research, admittedly years ago now, showed no significant uptick in medical when an attorney was involved. Not surprising considering that workers' comp medical is often front-end loaded, treating the immediate needs of the injured claimant, while most claimants don't seek representation until later in the claim process.

If anything, this study confirms what we've always thought: Avoid legal battles when you can. For years, the folks in workers' comp claims considered litigation to be a normal part of the business, but that's changing now. Litigation avoidance backed up by predictive systems that help us spot the claimants most likely to call an attorney is part of how claims get done in 2024. The first litigation prediction systems in comp go back 15 or more years now, and they get better all the time. If we know that a particular claimant has a serious likelihood of litigating, we can take measures that will materially lessen the chance of that call to 1-800-WE-LL-SUE.

Being the claimant in a complex workers' comp case can be very frightening. I know. I had a potentially life-changing comp injury years ago. I understood the system, and it was still a scary and confusing place to be. I have immense sympathy with the person who has been injured, is struggling physically, may well be taking powerful drugs, and doesn't know what's going to happen to his/her job, career, or family. Calling a lawyer can seem like the right thing to do.

Your role? Don't get on your we'll-fight-them-all-the-way-to-the- Supreme-Court legal high horse. Work with your claims people to identify these claims and put together a resolution strategy that takes proper care of the injured worker but doesn't spend that extra $7,700+ the WCRI calls out in their report. Sometimes a little extra care in your communications and a more welcoming approach to a settlement may be all it takes. That's the right thing to do in every way.

*If you're a quant, it's a very good read. WCRI's people know their stats, and the fine ways in which they sift the data are fascinating and impressive.