Paying Workers Comp Benefits Late – Five Ways It Can Cost You
Paying Workers Comp benefits late can cause a claims adjuster or staff many headaches that quickly can avoid many problems in the future. Many states have rules on the books that penalize slow payers for benefits that are owed to the injured employee. Yes, I have missed paying weekly TTD checks in the past and paid them late. Any adjuster with more than three years of experience has at one time paid a weekly check late. It happens.
How Paying Workers Comp Benefits Late Ruins A File
Some states heavily penalize settlement check payments on settled files. Even smaller weekly benefits checks can trigger huge fines. Check out this article where I drove the check to the claimant attorney's office as it was due that day. A $12,500 penalty could have been enforced if I mailed it. Why – because it is the date received, not the date mailed that counts in most benefit penalty assessments. Having to explain why I cost the file $12,500 extra ($15,000 in today's dollars) was something that I wanted to avoid completely.
File integrity – when the medical providers on a file or the injured worker cannot count on timely payments, their trust diminishes quickly. One cannot usually regain this trust once a payment runs late. Check out this WCRI article where injured workers said that trust was the most important component of a Workers Comp file.
Workers Comp commissioners or hearing officers become irritated quickly when the file contains a history of late payments, or the case is before them because of late payments. The hearing may not turn out very well. This goes back to the above #2 that can result in #1 occurring during the hearing.
You lose some or all of your rights to any subrogation funds. Some states such as PA and HI count the funds paid out on the file – not the amount reserved or expected recovery amounts as the lien on the file. An example that I read today comes from a Hawaii Supreme Court decision on Workers Compensation liens and subrogation of third parties. Please note this only applies to Hawaii. You can find the decision on the Supreme Court's website here. The part that jumped off the page to me was this passage in the decision:...an employer's “share” is subtracted from “compensation paid,” and not from “compensation paid” plus “future [WC] benefit payments.”
Attorney involvement spikes when payments run late. Paying weekly Workers Comp benefits late or when the injured employee receives a balance billing from a medical provider makes the claim seem out of control. Claimant attorneys can bring the file back in control quickly.
Paying workers comp benefits late has many other disadvantages. Most adjusters could add at least another five to the list.
This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.
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