Injured workers who hire attorneys to handle their workers’ comp claims tend to stay on temporary disability longer, according to a newly released white paper by CLARA Analytics, an artificial intelligence and data science company that specializes in machine learning products to improve injured worker outcomes and drive down unnecessary claims costs.

The Impact of Attorney Involvement on Injured Workers highlights how litigation impacts costs, disability duration and the length of time a claim will remain open.

It’s been said that workers’ comp has been slow to adopt analytics – as opposed to personal and commercial auto lines. However, Jayant Lakshmikanthan, president of the data sciences company, said that the tide is turning.

“We can see an increasing level of interest on the workers’ comp side as well, across all the players in the market, reinsurance companies, primary carriers, TPAs,” said Lakshmikanthan.

To gain insight on just how much litigation has derailed the system, the firm embarked on a study to examine 11 years of data from a single, national payor. The research examined injury years from 2007-2017 and focused on closed indemnity cases across several states.

The payor provided a good spread of data from 46 states.

“It’s quite representative of the nation at large,” said Lakshmikanthan.

The analysis, according to the white paper, was controlled for covariates “known to affect costs, temporary disability (TD) days, and/or claim duration, to arrive at the independent effect of attorney involvement (worker attorney, defense attorney or both) on these three outcomes.”

The study found that litigated workers’ comp claims were 388 percent more expensive than non-litigated claims. In addition, median values rose 739 percent when attorneys became involved in a claim. Claims took considerably longer to close, the study found that it took 195 percent longer to resolve claims.

Table 2 shows the attorney involvement rate by state for the top 20 states by volume in our dataset.

Litigation also affected the duration of lost time associated with an injured worker’s injury. In the claims studied, litigation meant 284 percent more days of lost time form work.

Lakshmikanthan said that while expected to some degree, the extent that litigation impacts claim expenses was significant – a more than 200 percent difference across all expenses was noted.

Table 3 shows the mean total claim paid with and without attorney involvement by state as well as the multiple in total claim paid associated with attorney involvement.

The study also found the following:

  • There were 50,840 claims, 14,183 of which involved attorneys, giving an overall attorney involvement rate of 28 percent.
  • The average total claim paid among claims without attorney involvement was $15,936 and $77,807 among claims with attorney involvement. The medians were $5,768 and $48,385, respectively.
  • The mean claim duration overall was 471 days; 305 days among claims without attorney involvement and 901 days among claims with attorney involvement.
  • At the state level, the attorney involvement rate ranged from a low of 1 percent in Montana to a high of 44 percent in Illinois.
  • The state with the highest average total claim paid was Virginia, with an average cost of $28,761 for claims without attorney involvement and $140,374 for claims with attorney involvement.
  • For claims with attorney involvement, the state with the lowest average total claim paid was Montana ($26,198).
  • The state with the shortest claim duration among claims with attorney involvement was Colorado (436.9 days on average).
  • The state with the longest claim duration among claims with attorney involvement was California (1,138.9 days on average).

Table 5 shows the average claim duration by state with and without attorney involvement as well as the multiple in claim length associated with attorney involvement.

The white paper recommended workers’ comp payors consider machine learning to minimize litigated claims and improve injured worker outcomes by identifying problematic claims and matching outcome driven attorneys.

“I’m seeing this across big market carriers, large carriers and even the smaller carriers, where they are realizing that the only way they can both improve the injured worker’s experience and at the same time bring down the cost structure is by better use of technology,” said Lakshmikanthan.

He said technology and associated processes can transform the injured worker’s experience dramatically and reduce costs significantly, anywhere from five to 30 percent.

Meta data and changing data are no longer deterrents, he said.

Lakshmikanthan said the choice of an attorney has a considerable impact on the case, as well.

“It’s not just the attorney by itself, in isolation, it’s also the attorney in the context of the claimant attorney who’s involved, in the context of the judge who’s involved, in the context of the jurisdiction you’re in,” he added.

He said the results should serve as a wake-up call for the industry.

To read the white paper, visit: https://info.claraanalytics.com/white-paper-litigation-impact