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The impact of COVID-19 on existing workers compensation claims

Health and Benefits|Insurance Consulting and Technology|Insurance Linked Securities|Workers Compensation
COVID 19 Coronavirus|Insurer Solutions

By Jeff Seibert and Mike Kenitz | April 8, 2020

The extent of the COVID-19 pandemic is uncertain but there will be an effect on employers’ existing backlog of workers compensation claims.

How will the COVID-19 pandemic impact an employers’ existing backlog of workers compensation claims? Much like the situation itself, a definitive answer is not yet known. However, there is likely to be an impact on existing cases based on what we know today.

The facts employers need to be aware of today:

  • Many injured employees will not have a job to return to.
  • Many injured employees’ light duty jobs have been or will be eliminated.
  • Elective/Nonessential surgeries have been delayed.
  • Physical therapy, in most cases, will be discontinued onsite.
  • Normal office visits and independent medical exams have been discontinued (virtual may continue).
  • Injured employees may more aggressively challenge their attending physician’s work release.
  • Medical provider services have been stressed, limiting availability amid increasing demand.
  • Adjustments need to be made for staff working from home.
  • Nurse field case management has been discontinued.
  • Employees may resist returning to work for fear of interacting with other infected employees/clients/customers.
  • Employees may find returning to work challenging due to childcare demands because of school closings.
  • State facilities have been closed, and thus unable to adjudicate issues.

Given these conditions, there are several potential impacts to workers compensation backlogs and many that can result in increased claim costs.

What can potentially impact increased claim costs?

  • Decrease in claim file closure rate – claims stay open longer
  • Increase in reopen claim rate – claims in a closed status are reopened
  • Increase in attorney involvement
  • Loss of leverage in settlement negotiations
  • Those with permanent restrictions, previously on light duty may have total disability benefits reinstated
  • Increase in allocated expenses
  • Increase in fraudulent claims

The bottom line in this situation is that there is a high probability that “ultimate incurred” will increase (ultimate incurred is the actuarial projection of the final paid amount on a universe of claims). However, there are several actions that employers can take now to soften the impact of increased claim costs.

Softening the impact – 10 considerations for employers

  1. Communicate your concerns to your claim administrator/carrier and determine the strategy to manage these issues. (For example, is the economic downturn a basis to resist disability payments?)
  2. Investigate all reopened claims to ensure validity.
  3. Review all light duty claims to weigh options and determine if current restrictions meet regular job functions.
  4. Communicate regularly with employees not released to full duty and identify and address any issues or barriers they are encountering.
  5. Provide the injured employees someone within the company they can turn to if they have any questions or issues.
  6. Check with your claim administrator as to the availability and potential benefits of telemedicine.
  7. If cash flow is not an issue, review high-value claims for potential settlement.
  8. Coordinate with your human resources and benefits departments to avoid duplicate payments.
  9. Verify all injured employees are aware of the employee assistance policy, if available.
  10.  Review all high-value claims periodically to ensure they have an effective resolution strategy in place and that it is being implemented.

Conclusion

In a fluid and dynamic environment, we must make decisions based on facts. If the current facts may be challenging, it is best to understand and address them in order to make well-informed decisions.

Disclaimer

Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include COVID-19 coverage.

The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. Some of the information in this publication may be compiled by third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort, or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication.

Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates.

Authors

Associate Director – Risk


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