How to keep unneeded lawyers out of Workers' Comp

Factors that can spur workers to hire lawyers include the severity of the injury and the employee's relationship with the employer.

It's no secret that workers' compensation cases involving attorneys are generally more expensive. In fact, workers' compensation, started a century ago to remove workers and their employers from the tort system, remains highly litigious.

It does not have to be this way, however. By uncovering the reasons that injured workers hire attorneys, employers can take active steps to lower unnecessary involvement.

To answer the "why" question, the Workers Compensation Research Institute (WCRI) asked 6,823 injured employees in the 11 states that represent 46% of paid workers' compensation benefits. Those surveyed had lost more than seven days of work from work-related injuries and illnesses and had hired legal representation. (Seventy-one percent of the workers surveyed did not hire attorneys.)

Their answers shed light on ways to help workers get through the system without attorneys. Not surprisingly, the study found that workers are more likely to seek attorneys when they feel threatened. Sources of perceived threats can take different forms. The character of the employment relationship, for example, was a factor for the 23% who strongly agreed that they hired attorneys because they feared being fired or laid off. Fifteen percent also strongly agreed that they needed  attorneys because their employer could perceive their claims as illegitimate.

Miscommunication in the claims process was another significant factor. In fact, 46% said they hired attorneys because they felt the claim had been denied when, in fact, it had not yet been accepted into the process. Attorney involvement among workers with the most severe injuries were 15 percentage points higher than those with mostly minor injuries.

The WCRI also found that the worse the injury and the more severe the illness, the more likely it was that attorneys would be involved. Claims from soft-tissue injuries, for example, were more likely to involve attorneys. These cases can be complicated, and nonwork-related causes can be an issue.

Employer size can also be a factor, but with offsetting implications. Larger companies are more likely to have co-workers who have experience with workers' comp claims and attorneys, which can encourage attorney involvement. On the other hand, larger employers are more likely to provide timely outreach to injured workers, with specialized staff trained to handle personnel issues.

Workers in smaller firms, however, are more likely to have direct personal relationships with their employers. They are less likely to file claims.

Job tenure also affected the likelihood of workers hiring attorneys. Workers who had less than one year on the job when they were injured were more likely to hire attorneys. Those with more than 10 years with the same employer were less likely to involve attorneys due to employer loyalty. This was offset, however, by those who feared a pay cut from not being able to return to a job with the same employer.

Attorney involvement tends to increase as workers age: 20% of workers age 55 or older hired attorneys. About 17% of those between the ages of 25 and 54 hired attorneys, and 9% of 15-to-24-year-olds did so. Older workers, the study hypothesizes, are more likely to know those who have relied on workers' comp attorneys.

Union membership was generally not a factor, with pros and cons of union involvement cancelling each other out. Unions provide valuable information to workers, but they tend to have connections to lawyers. At the same time, unions provide protection for reemployment and may also help workers navigate the workers' comp system, partially substituting for attorneys' roles.

Those who were interviewed in Spanish hired attorneys twice as often as those who were interviewed in English. These findings reflect the importance of understanding the demographics of the local labor force. The less-educated workers were more likely to hire an attorney because they were more likely to be intimidated by the claims process. High school graduates were six percentage points more likely to hire attorneys than college graduates.


What employers can do

Thankfully, there are ways that employers, claims organizations, and state agencies can decrease or eliminate unnecessary legal action.

Training supervisors is one way to make a difference. Supervisors are often in the best position to shape workers' initial expectations about what should happen, post injury.

Communicating in a clear and timely fashion about the status of the claim can also reduce the likelihood of attorney involvement. The largest factor predicting attorney involvement is the perception by a worker that the claim has been denied. Workers need materials that explain the claims process and also tell them what to expect.

Paying attention to demographic factors can make a difference. An injured employee's age, education, and cultural background can affect the likelihood of attorney involvement.

Eliminating system features that encourage denials or payment delays will benefit injured workers and their employers overall. Since delays may be misperceived by the workers as denials, employers can encourage state agencies to produce and provide educational materials and telephone help lines.

By Richard A. Victor is executive director of the Workers Compensation Research Institute

Source: The CFO Magazine