Best Practices in
Outcome-Based
Workers’ Compensation
Litigation Management
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• Janice Van Allen, Director of Workers’ Compensation,
Walmart Stores, Inc.
Responsible for aligning Walmart Stores’ core goal of Excellence within
Workers’ Compensation to maintain a competitive advantage while
ensuring Walmart injured associates receive the most effective medical
care available following a work injury focused on recovery and return to
gainful employment.
• Misty Price, Director of Analytics, Adelson, Testan,
Brundo, Novell & Jimenez
Responsible for planning, implementing and executing best-in-class
methodologies to provide strategic litigation management and analytics
within a national workers’ compensation defense law firm.
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WHAT TO EXPECT
After attending this session you should be able to:
• Recognize the challenges to achieving better outcomes based
on new industry models for managing Workers’ Compensation
litigation.
• Readily identify actionable information that can be used to
create a framework to support outcome-based litigation
management.
• Determine how you can begin to integrate strategy and
analytics into managing Workers’ Compensation litigation.
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If you go on
doing
what you have always done,
You will go on
getting
what you have always got.
~ Tony Robbins
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CLAIMS MANAGEMENT HIERARCHY
CLIENT
BROKER/
CONSULTANT
TPA
ACCOUNT
MANAGER
OPERATIONS
MANAGER
SUPERVISOR
ADJUSTER
ADJUSTER
ADJUSTER
SUPERVISOR
ADJUSTER
ADJUSTER
ADJUSTER
ADJUSTER
ADJUSTER
WC ATTORNEYS
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LITIGATION MANAGEMENT: OBSERVATIONS
Adjuster and Attorney turnover is rampant
Bureau of Labor Statistics: Average worker stays at their job 4.4 years, but the
expected tenure of youngest employees is about half that.
Future Workplace Multiple Generations @ Work: 91% of Millennials (born between
1977-1997) expect to stay in a job for fewer than three years.
Jeanne Meister, Forbes: Job-hopping is the “new normal” for Millennials.
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LITIGATION MANAGEMENT: OBSERVATIONS
Litigated files are the most costly claims in the inventory, but
most organizations manage them one file at a time at the
adjuster level.
Adjuster’s relationship with counsel drives most file assignments.
The feedback loop for counsel to provide information and issues
back to the client is often non-existent or rarely used, leading to
missed opportunities.
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LITIGATION MANAGEMENT: OBSERVATIONS
Law firms not traditionally valued as business partners.
Line attorneys generally do not understand the Risk
Management world, so they do not recognize how they
impact “program” results.
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LITIGATION MANAGEMENT: OBSERVATIONS
Different claim complexities may require different legal
resources, strategies and management during the life of a claim.
Cumulative Closure Percent by Incurred Stratification
100%
90%
80%
$2,000
70%
$25,000
60%
$50,000
50%
$100,000
40%
>$100,000
30%
20%
10%
0%
Year 1
Year 5
Year 10
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LITIGATION MANAGEMENT: OBSERVATIONS
Multivariate analysis has not been leveraged in litigation as it
often is in other areas of claims management.
Understanding the vast number of untapped variables in your
litigation data is the crux of outcome-based litigation
management. (Examples: obesity/co-morbidities, large losses,
claimant attorney.)
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LITIGATION MANAGEMENT: THINK DIFFERENTLY
By setting a strategy and managing your litigated cases
at a program level:
• Your program is not dependent on individual performers
• Resource management and allocation is more effective
• Opportunities and trends can be identified more readily
and addressed
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LITIGATION MANAGEMENT: THINK DIFFERENTLY
Step One: Creating a framework that supports
outcome-based litigation management.
Take ownership of the evaluation, selection and
consolidation of law firm partners.
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LITIGATION MANAGEMENT: THINK DIFFERENTLY
“What gets measured, gets done!”
- Karen Stankevitz, Director of Consulting
To effectively incorporate metrics and dashboard
reporting there must be a methodology to consolidate
and transfer files.
Consolidating legal cases to a limited number of firms
and focusing on closures has resulted in reduced
expenses and has led to reduced actuarial projections.
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ACTIONABLE INFORMATION
Enhanced litigation metrics:
• Typical: Fees, Duration, Closures
• Managing for Outcomes: Litigation Stages, Types of Closures
Closures:
• Date Tracking – Staggered reporting dates
To Litigation (Law Firm)
o To Claims (TPA)
o
• Types
o
o
Full and Final
Open Medical
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BEYOND TASK MANAGEMENT
Staging the pipeline of litigated cases helps you
assess and better monitor claims and ultimately
the overall book.
•
•
•
•
Discovery
Negotiations
Pending Settlements
Settlements
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BEYOND TASK MANAGEMENT
• Discovery
• Negotiations
• Pending Settlements
• Settlements
Superimposing matter stage upon matter age and the
size/complexity of the file, will enable you to identify
opportunities to allocate resources strategically to
drive better outcomes.
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VARIABLES FOR PROGRAM STRATEGIES
Other Actionable Information:
• Venue
• Projected Closure Date
• Authority Requests/Grants
• Morphine Equivalent/Opiates
• MSA
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COMPLEX LOSSES: SOPHISTICATED STRATEGIES
All claims are not equal; impact expected trajectories
through stratifying your losses:
• Use resources more strategically
• Provide better direction to the attorneys to allow
them to prioritize their caseload
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SAMPLE STRATIFICATION
Total Incurred Stratification
Total Incurred
Stratification
0 - $25,000
$25,001 - $50,000
$50,001 -$75,000
$75,001 - $100,000
$100,001 - $200,000
$200,001 - $300,000
$300,001 - $400,000
$400,001 - $500,000
> $500K
Grand Total
Claim
Count
62
78
80
58
90
77
26
13
22
506
% of
Claim
Summary
Count Claim Count
12%
15% 278 Claims
or 55%
16%
11%
10%
15% 206 Claims
or 41%
5%
3%
22 Claims or
4%
4%
Total
Incurred
$766,602
$2,944,978
$5,247,580
$5,244,141
$14,050,225
$18,501,021
$8,792,025
$5,721,943
% of
Total
Incurred
1%
4%
6%
6%
17%
22%
11%
7%
$21,207,504
$82,476,019
26%
Summary
Total
Incurred
$14 MM or
17%
$47 MM or
57%
$21MM or
26%
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CLAIM CLOSURE PROJECTS
Closure rates become more meaningful when evaluated
by financial stratifications.
For relief carried forward actuaries will want to see that you
apply lessons learned from the project to future process.
When beginning a closure initiative be sure to identify a
baseline rate and type of closures.
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APPROACH TO LEVERAGING ANALYTICS
Today’s challenging environment heightens the importance of
embracing technological advances which will enable us to
maintain a competitive edge while ensuring our injured
associates receive the most effective medical care following an
injury.
The new age of analytics has led to the development of a variety
of solutions.
Leveraging claims-related data enables claims handling
resources to take preventative and strategic actions earlier in
the life cycle of a claim.
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LITIGATION MANAGEMENT: APPROACH
Set the strategy – define success
• Litigation Avoidance
o
Success is looking after the interests of associates as the best method to
manage the threat of litigation.
• Litigated Claims
o
Success is avoiding an adversarial relationship with associates (when
possible), ensuring timely resolution of litigated matters. Optimal resolution
minimizes future exposure through full and final settlements (when available
and appropriate).
• Understand the Jurisdiction – Resolution Options
• How to navigate to the best obtainable outcome
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UNDERSTANDING LAW FIRMS
Firm and Attorney
•
•
•
•
Revenue = hour x rate
Billing bonuses
Caseload
Ancillary resources
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COMMUNICATION
Establish your Attorney Panel
• Point of Contact
• Partner v. Vendor
• Firm v. Attorney
One Team Approach
• Create common vision/common strategy – YOUR strategy
• Encourage use of firm resources
o
Does size matter?
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LITIGATION MANAGEMENT: METRICS
Enhanced Outside Counsel Reporting
• Properly align metrics to program goals
• Employer-driven information collection establishes a
context for identifying and validating impediments
• Friendly competition will help drive results
• Understand the limitations of collection and reporting of
data
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LITIGATION METRICS
Establish Monthly Metrics
State
WC
Defense
Firm
Pending
New
Reserves Payments Settlements
XXX
XXX
XXX
XXX
XX
XX
XX
XX
$XXXXX
$XXXXX
$XXXXX
$XXXXX
Settlements
Avg
Closures
% Closed % Closed % Closed
at 18
at 12
at 9
Net
months
months
months Closure % ADSL
% Closed % Closed
with Med with Med
Closed
Open
California
Firm A
Firm B
Firm C
$XXXXXX
$XXXXXX
$XXXXXX
$XXXXXX
$XXXXX
$XXXXX
$XXXXX
$XXXXX
$XXXXX
$XXXXX
$XXXXX
$XXXXX
XXX
XXX
XXX
XXX
XX%
XX%
XX%
XX%
XX%
XX%
XX%
XX%
XX%
XX%
XX%
XX%
XX%
XX%
XX%
XX%
XX
XX
XX
XX
XX%
XX%
XX%
XX%
XX%
XX%
XX%
XX%
Evaluate data in a consistent manner.
• By Jurisdiction
• Across Firms/Attorneys
Key Measurements:
•
•
•
•
Pending and New
Actual and Average Financials
Closing Ratio/Turnover Rates
Ratio of Full and Final Closures
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QUESTIONS, FINAL COMMENTS AND
CONTACT INFORMATION
Janice Van Allen
Director of Workers’ Compensation
Walmart Stores, Inc.
Janice.van_allen@walmart.com
Misty Price
Director of Analytics
Adelson, Testan, Brundo, Novell & Jimenez
MistyPrice@atblaw.net
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