Workers’ compensation claims that end in litigation – metrics and management

Few law departments shepherd workers’-compensation (WC) claims, yet sometimes those departments must defend lawsuits that evolve from them (See my posts of Oct. 27, 2005 on whether WC claims were in certain benchmark reports and Jan. 25, 2006 on whether law departments count WC in their reported litigation.) Law departments (and companies) do not see the legal component of WC – routine, highly-regulated, and viewed as claims management – as important enough to alter the reporting and responsibility structure (See my post of April 4, 2006 about the specialist company, AHC, Inc. that has resident WC experts.). In this regard, some data from Marsh & McLennan’s Viewpoint, Vol. 33, No. 1 of 2004, at 24 caught my eye.

“And although the workers’ compensation system is supposed to reduce litigation, 30 percent of California’s open and closed [workers’ comp] indemnity claims from 1992 to 1999 ended in litigation – compared with just 14 percent nationally.” No surprise that California leads that derby, but if you apply the 14 percent national figure against the hundreds of thousands of WC claims in the rest of the country, it speaks to quite a litigation burden. Perhaps third party administrators siphon off much of the litigation management.