An industry study tells an interesting story about workers’ compensation claims. A significant upward trend in denials ultimately cost employers and their claims administrators revenue. That’s because about 67% of claimants nationwide eventually prevailed over such denials, despite the resources claims administrators devoted to denying the claims.
With such a huge percentage of denials converting to paid claims, the administrative and legal costs claims administrators incur represent something sadly typical of workers’ comp: pointless waste.
A study conducted by Lockton Companies, an international insurance brokerage firm, determined that nationwide injury claim denials increased by about 20% between 2013 and 2017, from 5.8% of claims to 6.9%. Yet, within 12 months of the denial, the employer/insurer ended up accepting and paying for over two-thirds of those denied claims.
Not only did the employer/insurer have to pay for the requested medical treatment in these previously denied cases; the employer/insurer also incurred significant additional costs to fight their losing battles against injured workers.
The average payment amount for a denied and subsequently paid claim is much higher than the average cost for an accepted claim. Lockton found that, on average, accepted claims cost $10,153. In comparison, initially denied, subsequently accepted claims cost an average of $15,694.
With far more denials overturned than upheld, the losses to employers and insurers are potentially staggering.
The numbers make a strong, clear statement: if claims administrators are under the impression that a policy of “deny first, ask questions later” saves money for their employers/insurers, these claims administrators are mistaken.
With injury claim denials on the rise over the last several years, employers/insurers need to ask themselves some tough questions:
Workers’ comp is a promise. To avoid constant, endless litigation when workers are hurt on the job, employers agree to do the right thing when injuries occur. Employees rightfully expect to be taken care of, not battled tooth and nail for every cent.
DaisyBill provides content as an insightful service to its readers and clients. It does not offer legal advice and cannot guarantee the accuracy or suitability of its content for a particular purpose.