Magazine article Risk Management

Recouping Workers' Comp Claims

Magazine article Risk Management

Recouping Workers' Comp Claims

Article excerpt

While every state requires its employers to provide workers' compensation benefits to workers injured on the job, those same employers have the right to recover a substantial portion of benefits (e.g., medical bills, wages) paid to responsible third parties. Most firms, however, are not even aware that they can recover workers' compensation claims payments, much less have an effective means in place to do so. By following a series of simple steps, risk managers can reduce workers' compensation costs and help contribute directly to their organization's bottom line.

Evaluate individual state subrogation laws. These laws vary state to state. Pennsylvania, for example, is a "first-dollar state," meaning the subrogating employer recovers its lien first and has priority over any awards obtained by way of verdict and/or settlement. Other states, such as Georgia, are "made-whole states," which require the injured worker to be fully rehabilitated before the employer receives any reimbursement. It is therefore extremely important for the employer to know the relevant state laws that apply. Many of these laws also entitle employers to credits against future workers' compensation payments, enabling employers to legally suspend payment of benefits.

Retain counsel. In many instances, injured workers retain counsel to pursue third party lawsuits. Under these circumstances, it is absolutely necessary for the employer to place the injured worker and his or her counsel on notice of its lien and demand that the lien be protected and honored at the resolution of the case. In other instances, however, the injured worker does not seek representation but instead relies upon the receipt of workers' compensation benefits in the form of medical payments and wage-loss indemnity. Here, if no counsel has been engaged, it is especially critical for the company to retain outside recovery counsel to pursue the opportunity. What on its face may appear not to have subrogation potential may prove to be a good recovery opportunity. Such cases typically include accidents occurring off-premises.

Investigate. Once an employer has committed to pursuing workers' compensation recoveries, it must put an appropriate investigative process in place to secure evidence, witness statements, necessary documentation and photographic evidence. …

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