Ken Martino On Third-Party Administrators And Workers' Comp Claims (podcast transcript)
LexisNexis Podcast Ken Martino July 20, 2009 (edited transcript)
On this edition, Ken Martino, President and Chief Executive Officer of Broadspire on third-party administrators and workers' compensation claims. Ken Martino is President and Chief Executive Officer of Broadspire, joining the company in 2007. His 27-year industry career includes leadership roles in a number of areas with companies in the third-party administrative services in property, casualty and insurance industries. His expertise includes strategic planning, financial management, data analysis and reporting and operational analysis. Before joining Broadspire, Mr. Martino spent seven years with specialty risk services, where he served as senior vice president, chief financial officer and senior vice president of account management. Mr. Martino has a Bachelor's degree in Finance from the University of Connecticut, where he also earned his MBA, and he earned his CPCU from the Insurance Institute.
Steve Berstler:Mr. Martino, thank you very much for your time.
Ken Martino: It's a pleasure being here.
Steve: First of all, can you tell us a little bit about Broadspire?
Ken: Broadspire is a leading third-party administrator for employers and insurance companies and we offer a broad array of customized claims and medical management services designed to increase employee productivity and contain loss costs. Our services include workers' compensation, auto, and general liability claims management. We are also heavily into medical and field case management, integrative workers' comp and disability programs, as well as risk and safety consulting services. Broadspire is the third largest workers' comp TPA. And a little known fact: We are the fourth largest medical management company. We are based in Atlanta, Georgia. We have approximately 2,400 employees in a network of 61 offices throughout the United States, and we recently added the United Kingdom. Broadspire is owned by Crawford and Company, which is the largest claims administrator in the world.
Steve: I'd like to focus on the workers' comp aspect of things in this podcast. I understand that workers' comp is about 30 percent of a company's insurance budget. What does your company do to help keep workers' compensation costs under control?
Ken: Well, Steve, there are two things that we think make us different from all the rest – first is the service breadth, and secondly our people. Broadspire directly provides all the key services our customers are looking for in a workers' comp claims administrator. We are recognizing the number one issue today in workers' comp is the rising cost of medical and the related complexity of the disability cases. We offer a fully integrated solution whereas our competitors must turn to outside vendors for a lot of those services. We feel that the integrated approach allows us to control all the key drivers of loss and provide superior outcomes by reducing the loss costs for our customers. I also mentioned people. As a service provider, the performance of our staff is very important to the results we achieve for our customers. And when we surveyed our customers to ask them why do you stay with us, they tell us it's because of the talent and the experience of our staff. They trust our people to handle their claims.
Steve: You mentioned the size of the company. I was wondering what you think the most important aspect of claims handling is for a third-party administrator the size of Broadspire?
Ken: We think the most important aspects are the quality, consistency and outcomes we deliver and we do it with passion. That's what's important to our customers and what's important to us. I mean making sure each claim follows the quality standards for investigation, evaluation, negotiation and settlement or making sure we are consistent in the level of customer service we provide in each one of our offices, delivering superior outcomes by improving productivity and reducing loss costs, and last but not least, showing a level of passion and engagement in everything we do. Hearing from a customer that we are hitting on all those key factors really makes my day.
Steve: You mentioned the expansion of the company recently into the U.K. Can you talk about some of the differences in how claims are handled here in the versus in other countries?
Ken: Most of the other countries don't have a workers' comp system as we know it here in the United States. They either have a country-run claim or disability system that incorporates workers' comp or they have a tort-based system like employer's liability. Working in those countries you either have the program administered through the government or you handle the claims much in the way we would with liability claims here in the United States. The other big difference you run into in other countries is the medical delivery process in those countries. Each one of the countries has a different type of medical system. You have a very little opportunity in many cases to apply what we use here in the for medical management techniques.
Steve: What kind of challenges do those differences pose to a company like yours?
Ken: We are looking at it now and evaluating each one of the countries to determine which services we think can best be offered in those countries. Right now we are looking at the European market as well and trying to determine how we can add value to the services we provide to the customers who might have exposures in those particular countries. It is getting in to understand each one of the systems, the medical delivery system as well as the legal system in those countries, and trying to tailor our services to meet the needs the customers have there.
Steve: That is a challenge. I imagine it takes a good deal of time, resources and manpower to get up to speed with a lot of those things?
Ken: We are very fortunate in our relationship with our parent company, Crawford and Company, to already have established resources in 63 countries. We have a leg up on a lot of people in having the resources already available and on the ground that when we get there to already know the process and the system, and it is a matter of training them in our systems and our service and the marketing materials and those kinds of things and bringing consistent products across the country and across the world.
Steve: What do you suggest lawyers know? What should lawyers know to work more effectively with third-party administrators?
Ken: The first insight I would give them is that we look at our job as helping people and most likely through one of the most difficult and stressful times they are having in their lives. It does not need to be an adversarial situation. I think working together within the framework of the state statutes here in the – each state has their own particular regulations – we should all be looking for ways to get that person back to a healthy and productive life. We are very open to ideas or ways to move claims through the process and as efficiently and effectively as possible, and we are open to that and want to communicate with the attorneys that that is really what we are all about.
Steve: There is a sixth circuit case called Brown vs. Cassens Transport, which I understand effectively allows a workers' comp claim to be heard in federal court. Can you talk a little bit about the case – explain what it was about and what the implications of this case may be on third-party administrators?
Ken: It hasn't made its way through the court yet. But basically it was a case that involved workers' compensation claims administration, and they brought a suit that alleged that the employer, the medical providers and the administrator, the TPA, were conspiring to deny claims. And then they brought a suit under the civil RICO Act that made its way through the courts. Originally through the process and through most of the appeals, there was no action. The court basically said there was no action provided because workers' comp is an exclusive remedy. Recently there was a case that has been remanded back to the sixth circuit from the Supreme Court that said they could relook at the case and consider it under that, but they have not done that yet. Ultimately we were not sure what the implications are but it is significant. If it is upheld that the plaintiffs are allowed to pursue civil RICO damages in workers' comp against self‑insured entities and their TPAs, that could be a problem down the road. I don't really want to get into it further because it is our policy not to comment on pending litigation.
Steve: What has the impact been on our current financial crisis? What kind of impact has this economy had on a company such as yours and third-party claims administrators in general?
Ken: In the marketplace in general, as you know, workers' comp is very closely tied to the employment base. That is where the claims come from. With a decline in employment, we have seen a decline in frequency, although workers' comp has been declining steadily over the last 15 years in terms of frequency. That is due to improvements in safety and work environments that employers have made. But this has really caused a downturn. So for all of the third-party administrators, we are all feeling the loss of business. It is great when we renew an account but the fact that they have now shrunk their business by 10% means we are going to see less of the claims coming into us as well. That has been a little bit of a problem. We have been very fortunate to have a good sales team that has brought in new business to help kind of moderate that, but the expectation is until employment starts to pick up again, we will feel the pinch of it.
Steve: What can companies such as yours do down the road to not feel that pinch quite so much?
Ken: The biggest thing we have done is we have – in addition to providing third-party administrative claims services – expanded to provide disability management and medical management services. So we are offering a full range of products, not just utilized within our integrated model, but on a stand-alone basis as well to help supplement that, and really it is about, again, the quality, consistency and outcomes. If we are able to drive that, we think we can attract much more business than we have been attracting to date because that is what employers are looking for – cost savings. There is more pressure on the risk management side to reduce costs. Having a better product than everybody else will get us more business.
Steve: Exactly. Expand, grow, diversify.
Ken: Absolutely. We will continue our worldwide expansion as well. We already have plans to establish ourselves in Europe and then we will move on from there.
Steve: Best of luck in the future with all of those plans and projects. Mr. Martino, thank you very much for your time and being part of our LexisNexis podcast.
Ken: Thanks, Steve, I appreciate it.
Steve: Ken Martino, President and Chief Executive Officer of Broadspire.
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