Best Practices in Outcome-Based Workers’ Compensation Litigation Management Recording of this session via any media type is strictly prohibited. Page 1 • 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. Recording of this session via any media type is strictly prohibited. Page 2 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. Recording of this session via any media type is strictly prohibited. Page 3 If you go on doing what you have always done, You will go on getting what you have always got. ~ Tony Robbins Recording of this session via any media type is strictly prohibited. Page 4 CLAIMS MANAGEMENT HIERARCHY CLIENT BROKER/ CONSULTANT TPA ACCOUNT MANAGER OPERATIONS MANAGER SUPERVISOR ADJUSTER ADJUSTER ADJUSTER SUPERVISOR ADJUSTER ADJUSTER ADJUSTER ADJUSTER ADJUSTER WC ATTORNEYS Recording of this session via any media type is strictly prohibited. Page 5 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. Recording of this session via any media type is strictly prohibited. Page 6 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. Recording of this session via any media type is strictly prohibited. Page 7 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. Recording of this session via any media type is strictly prohibited. Page 8 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 Recording of this session via any media type is strictly prohibited. Page 9 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.) Recording of this session via any media type is strictly prohibited. Page 10 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 Recording of this session via any media type is strictly prohibited. Page 11 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. Recording of this session via any media type is strictly prohibited. Page 12 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. Recording of this session via any media type is strictly prohibited. Page 13 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 Recording of this session via any media type is strictly prohibited. Page 14 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 Recording of this session via any media type is strictly prohibited. Page 15 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. Recording of this session via any media type is strictly prohibited. Page 16 VARIABLES FOR PROGRAM STRATEGIES Other Actionable Information: • Venue • Projected Closure Date • Authority Requests/Grants • Morphine Equivalent/Opiates • MSA Recording of this session via any media type is strictly prohibited. Page 17 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 Recording of this session via any media type is strictly prohibited. Page 18 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% Recording of this session via any media type is strictly prohibited. Page 19 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. Recording of this session via any media type is strictly prohibited. Page 20 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. Recording of this session via any media type is strictly prohibited. Page 21 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 Recording of this session via any media type is strictly prohibited. Page 22 UNDERSTANDING LAW FIRMS Firm and Attorney • • • • Revenue = hour x rate Billing bonuses Caseload Ancillary resources Recording of this session via any media type is strictly prohibited. Page 23 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? Recording of this session via any media type is strictly prohibited. Page 24 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 Recording of this session via any media type is strictly prohibited. Page 25 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 Recording of this session via any media type is strictly prohibited. Page 26 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 Recording of this session via any media type is strictly prohibited. Page 27