Moore: Watch the Reserves

Monday, December 7, 2020 | 0

When does a reopened workers' comp claim cost more budget for insured and self-insured employers?

James Moore

I reviewed a file that had one of the classics that cause agents, risk managers, underwriters, rating bureaus and, most importantly, insureds to become very irritated at claims adjusters.

Adjusters have a tough enough time making everyone happy (think impossible).

As with my last article, an easy fix can be accomplished. I will give you the exact example with all the names removed for anonymity.

All was not well

A very good senior adjuster had handled a claim very well, in my opinion. Good job! The file was closed timely. The claim was an eye injury. Those claims can be complicated sometimes.

The injured employee, being a conscientious employee who was moved into her home from the office, increased her dedication to the utmost. She worked 15 hour days for her employer — possibly too many hours. Here is an A for effort from me to her.   

A good employee who had an eye injury on the job was only out for two weeks. This is one of those claims where the employee, employer, carrier and provider all worked together to return a good employee as soon as possible to gainful employment.   

The employer provided her a desk-type job. My Six Keys for Saving on Workers' Comp claims were followed. All parties in the claim did an excellent job.   

Because the employee only had two weeks out of work, the reserves were set very accurately. The medical portion of the reserves was set very high due to the possibility of eye surgery, which never happened with the injured employee’s medical treatment.     

Just bad timing?

This situation happens quite often. The file was reopened with the old reserve even though it was just to pay for a few medical bills. The bills totaled $845.

The file was reopened with in excess of $20,000 in medical reserves. What happened from there was the injured employee was seen and all medical bills were paid. Even if there was a future office visit, the file reserves were left open with $20,000.  

The UNISTAT date hit and, boom! — $20,000 of extra reserves hit the experience modification factor.   

Moral of the reopened workers' comp claims story

Reopened files happen often. The main idea, regardless of timing, is to reclose the file or reduce the reserves quickly when the file is reopened to fit the situation.  

No, $20,000 was not a tragedy in this situation.   

I have seen files during the pandemic in much larger amounts for reopened workers' comp claims. No, I am not being too picky.   

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.