Three Keys to Mitigate Workers’ Compensation Exposure

During a time of rising costs for businesses and a tight labor market, managing risk and avoiding litigation expenses is at a premium. What can a business do to cut litigation costs and focus more on their day-to-day operations rather than worrying over their balance sheet? Witnesses, surveillance, and vocational rehabilitation are three keys to cutting costs in workers’ compensation claims.

Nobody likes the thought of surveilling employees to minimize fraudulent claims—it feels Orwellian to monitor workers. After all, the percentage of workers who lie about having a work injury in an effort to recover workers’ compensation benefits is small compared to the overall number of claims. Nonetheless, fraudulent and exaggerated claims cost businesses significantly. The FBI has estimated that fraudulent claims cost businesses a total of $7 billion per year.

Surveillance of heavily trafficked workstations, common areas, and vehicles is a great way to prevent fraudulent claims and to protect employees from possible third-party claims. For example, if a work vehicle has a dash camera, that footage can protect the employee if there is a motor-vehicle accident and a third-party driver claims the employee driver was at fault.

Consider a case where an employee driver taps the rear bumper of a car in front of him while in a company vehicle. The third-party driver brings a lawsuit against the employee driver, alleging multiple injuries and a lost-wage claim. The exposure can be enormous despite the minor nature of such an incident. To rebut this type of claim, a dash camera can quickly reveal the baseless allegations. This saves the employer litigation expenses and minimizes damages. Additionally, the employee driver is happy since the claim against him is quickly minimized or eliminated by the footage. Thus, surveillance ideally places both the employer and employee at ease if it helps protect the employee just as much as it helps the employer limit fraud. If an employee is honest, and an employer is transparent about its use of surveillance (disclosing its use), then there should be little concern for such monitoring while on work premises or using company equipment or vehicles.

Witnesses are another key resource that employers can use to minimize exposure, and failure to properly investigate and utilize witnesses in court can lead to heavy losses and higher defense costs. Consider a hypothetical where a warehouse worker alleges he and other workers were instructed to throw boxes onto a conveyor belt to load products more quickly. Then, the employee sustains a back injury reportedly catching a box. While the employer was confident that no employees were ever instructed to toss boxes, it is unwilling or unable to produce a witness to testify to the business practices. This scenario creates heightened exposure in the claim solely because no witness was available to discredit the employee. These circumstances arise frequently in workers’ compensation claims and it saves countless dollars on claim exposure if an employer and defense counsel can identify someone with personal knowledge who can rebut alleged injuries. Such witness investigation and preparation will keep defense costs and exposure lower, minimizing exposure early in the life of a claim before it is found compensable. Moreover, when an employer has a reputation of keeping meticulous personnel file records and fighting claims with witnesses, employees are less likely to bring claims against their employer. Employers that do not set a precedent of aggressively investigating with defense counsel to confirm or disprove a claimant’s version of events are left defending more claims and paying more on average to litigate them. This is not to say that every stage of litigation in every claim should be contested, but rather that every available investigative tool should be deployed to mitigate exposure.

Even if a claim has no useful surveillance and no witnesses are available to defend a claim, a well-executed vocational rehabilitation plan is often helpful in keeping exposure lower. Once an injured worker has proceeded through the claims process to the point of maximum medical improvement, an employer and insurer should consider determining the extent of work restrictions. If there is no ability to accommodate work restrictions, then vocational rehabilitation helps stop the ongoing lost-wage claim. Vocational rehabilitation places the burden on the employee to put in the effort to cooperate with the return-to-work plan and job search efforts. Defense counsel should find effective vocational counselors who motivate and push the employee during the search, keep a good paper trail of the employee abiding by the plan, and to prominently note any problems that may arise.

These three tactics often make the difference at inflection points in the life of a claim. Social media evidence or surveillance can be the difference between having a denied or accepted claim. A good vocational plan and counselor are often the determining factor in avoiding a permanent total disability claim.