How to Stop the WC Litigation Train

It can be frustrating when an injured employee hires an attorney—especially when the employer is doing their best to accommodate their workers’ compensation (WC) claim. 

WC insurance was designed to prevent the threat of litigation by removing the employee’s right to sue their employer in exchange for guaranteed compensation for an injury. However, despite the promise of benefits, the WC train has derailed, causing increased litigation, ballooning claim costs, and more hardship for injured employees. Litigation has become a pervasive problem.

Lawyer with injured patient and doctor

When an employee engages legal representation in a WC claim, the finger-pointing is often aimed at the claims adjuster. However, there are many reasons for attorney involvement. This blog explores those reasons and offers steps you can take to curb skyrocketing litigation.

The California Workers’ Compensation Institute (CWCI) started its research in 1975 when attorney involvement in WC claims was only 12% for lost time cases and just 6% overall. Recent data reflects a growth to between 35% - 50% in California, with many states showing equally high incident rates.  

The length of disability is twice as long, and claim costs are more than 50% than when there is no attorney involvement. These studies should behoove employers, insurance carriers, and others involved in WC claim administration to improve education and communication with injured employees.

What Are Typical Reasons for Litigation?

A lack of understanding of the basic structure of WC drives many injured employees to seek the services of an attorney. Many injured employees often don’t realize that WC is a vital safety net created to protect them in the event of workplace injuries or illnesses by automatically providing financial and medical benefits.

WC is a no-fault system, meaning injured employees do not have to prove that they were not at fault or that their employer was at fault in causing their injury to be eligible for benefits. As a government-mandated program, it also protects employers from potentially costly civil lawsuits through a concept known as “exclusive remedy.”

“Exclusive remedy” stipulates that employees give up their right to sue their employers in exchange for statutory benefits. In other words, WC is an employee’s sole remedy for obtaining compensation for a work-related injury. Contrary to popular belief, there are no lawsuits in WC. An attorney simply acts as an injured employee’s advocate.

WC has a built-in advocacy system designed to protect employees. Injured employees not only can speak directly with their claims adjuster but also contact their local WC board, speak with an information and assistance officer or ombudsman, and even attend a hearing without an attorney.

Because of the liberal construction of WC law, which favors the injured employee, a WC Judge or arbitrator will likely act in lieu of an attorney siding with the injured employee over any disputes.

Another factor that prompts injured employees to seek legal representation is misinformation. Based on their own misconceptions, family, friends, and coworkers may tell injured employees that they need to hire an attorney.

The media also presents false information regarding what an injured worker should do. Since the pandemic, advertising for WC legal services has risen dramatically. TV commercials and billboards for law practices lead injured employees to believe hiring an attorney to represent them is necessary.  

Ambulance chasing in Southern California is rampant, with attorneys even frequenting supermarkets to sell their legal services for WC claims. One law firm went so far as to offer workers Taylor Swift concert tickets in exchange for registering for services.  

One theory for this uptick in WC attorney advertising is that the pandemic closures led to a downturn in claims due to fewer on-the-job injuries and, thus, a reduced need for attorney services. According to this theory, attorneys have increased their marketing budgets and promotion efforts to compensate for lost case revenue.

Advertising Causes Confusion

Additionally, digital marketing, websites, social media, and search engine optimization (SEO) make it easier for law firms to spread incorrect information. For example, an online search for “workers’ compensation attorney” generates articles with headlines like “10 reasons you need a workers’ comp attorney” or “We win WC cases.” Once again, there’s nothing to be won in a WC case since the benefits are legally mandated without regard to fault.  

One sponsored legal ad has the headlines “Free, for everyone, always” and “Free workers’ compensation lawyer.” But attorneys aren’t free. They get paid a percentage of the final settlement in a workers’ compensation claim, which is 15% on average.

Some attorneys falsely promise injured employees 30% more in settlements. However, by law, injured employees are entitled to the same compensation whether they have an attorney or not. There is no pain and suffering or arbitrary award. Benefits are established by statute based on the type of injury sustained.

Litigated WC claims do cost more. However, the higher amounts paid on such claims do not typically go to the employee’s pocket. Instead, more money is spent on defense attorney costs, claim administration expenses, court and hearing costs, depositions, and medical-legal exams because of attorneys muddying the waters.
Complex rules and regulations over the eligibility for or structure of key WC benefits may also lead to litigation, including:

  • Coverage disputes. Employers and insurance carriers may argue whether or not an injury is work-related and deny the injured employee’s claim. Certain types of claims are more likely to be challenged, such as cumulative trauma claims, which have a higher percentage of attorneys than specific injury claims because of their complexity. Similarly, pre-existing conditions that are aggravated by work duties and mental stress claims have a higher litigation rate. 
  • Benefits rates or amounts. Disagreements can develop regarding the compensation amount an injured employee is entitled to, particularly concerning wage replacement, permanent disability, and the extent of future medical care. 
  • Entitlement to medical care. Conflicts often arise over the appropriateness and necessity of medical treatment, such as physical therapy, other conservative modalities, or surgery.
  • Return to work issues. Disputes can emerge when determining whether an injured employee is fit for duty, as well as any work restrictions or accommodations available by the employer through modified or alternate work assignments.

Delays Cause Employee Concern

Surveys of injured workers reveal that delays in the WC process -- including medical treatment, return to work, and payment of medical bills and prescriptions – also motivate employees to hire an attorney.  

While the insurance carrier is often blamed for these delays, many are integral to the WC benefit framework. The system aims to provide checks and balances and ensure reasonableness and fairness on all sides.

For example, many states require the treating doctor to use mandated reporting forms to request medical treatment. Doctors who don’t use the correct form will cause treatment to be delayed.

Many states require claims administrators to obtain second opinions on medical treatments through a formal utilization review process. A set formula determines disability rates, and checks are issued on a state-mandated payment schedule.

State watchdog agencies audit insurance carriers to ensure they administer benefits appropriately based on regulatory requirements. If they fail, they are subject to penalties.

Finally, unresponsiveness, lack of concern, and lack of communication by the employer or the claims adjuster are additional reasons for seeking legal services.

Putting the Brakes on Litigation

Maintaining a positive relationship with their employees is at the top of the list of ways employers can reduce the chances an injured employee will hire an attorney. The employer should show concern and compassion and keep in touch with the worker from the first injury report.

Employees typically hire attorneys because of fear, uncertainty, confusion, and feeling unappreciated. Employers should train frontline supervisors and HR managers in empathy and sympathy skills and to advocate for their employees, provide education, and help navigate claims. Employers can lean on claims adjusters and their broker claims consultant to help.

While the WC system intends to provide timely support to injured employees and protect employers from extensive legal battles, the system can be frustrating, and disputes can still arise.  

Understanding the common issues that lead to litigation is crucial for both employers and employees to navigate this intricate terrain successfully. Knowledge and education, effective communication, advocacy, realistic expectations, and a commitment to the well-being of your employees can reduce the perceived need for attorneys. 



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