Cost Shifting: The Dirty (not so little) Secret of Worker’s Comp

Today’s post comes from guest author Tom Domer from The Domer Law Firm.

Seasoned worker’s compensation practitioners know some employers and worker’s comp carriers consciously employ questionable tactics to limit their exposure. They mischaracterize high risk employee job titles as low risk to reduce premiums; they call long-term employees “Independent Contractors” to get them off worker’s compensation roles; they hire doctors to render boilerplate predictable opinions to deny claims; and they discourage genuine worker’s comp claims by telling employees to submit work-related medical bills to group insurers, Medicare or Medicaid.

They discourage genuine worker’s comp claims by telling employees to submit work-related medical bills to group insurers, Medicare or Medicaid.

This last piece of fraud is the most nefarious, especially since medical costs now exceed indemnity payments in Wisconsin and most other states. The cost shifting means we all pay (as increased group health premiums and taxes) for medical expenses that should be paid by worker’s comp carriers. In states such as Wisconsin where work injury related treatment expenses are paid at doctors’ usual and customary rates, shifting the cost to a group carrier, Medicare or Medicaid saves worker’s comp carriers millions.

The cost shifting means we all pay (as increased group health premiums and taxes) for medical expenses that should be paid by worker’s comp carriers.

Denial of a claim by using “legitimate doubt” or purchasing the opinion of an adverse medical examiner results in medical treatment provided at reduced negotiated rates through non-worker’s comp coverage (Union health care, Medicare, Medicaid, etc.). Medical providers offer treatment to injured workers lucky enough to have group insurance or access to Medicare or State Medicaid. Doctors and hospitals and other medical providers under competitively negotiated contracts with group carriers, Medicare and Medicaid provide services at a fraction of the usual and customary rates they could charge under worker’s comp. By paying a grand or two to purchase an “IME” opinion, a worker’s comp carrier can save tens of thousands in medical expenses by shifting costs to taxpayers and co-employee group premiums.

Shifting the cost to a group carrier, Medicare or Medicaid saves worker’s comp carriers millions.

When worker’s comp claims are resolved at hearing, an Administrative Law Judge or Review Commission will order the worker’s comp carrier to reimburse the group carrier, Medicare or Medicaid for expenses they paid. But the reimbursement will be at the reduced group carrier, Medicare or Medicaid rate, so the comp carrier saves on medical treatment even when reimbursement is ordered.

When claims are settled (as most claims are), the worker’s comp carrier / employer rarely pays “full freight” reimbursement for medical treatment paid by the other carriers or Medicare / Medicaid, even when the worker is “held harmless” for those claims by the worker’s comp carrier.

Injured workers’ attorneys of necessity participate in this scheme. Since group carriers, doctors and other medical providers do not have standing in Wisconsin and many other states worker’s comp hearings, the attorney’s obligation and intent is in protecting the injured worker, not the group or government insurance plan. To maximize the worker’s recovery, when the comp carrier offers a lump sum global settlement, not specifying or allocating money for indemnity or medical expenses, attorneys often negotiate with these non-worker’s comp carriers to reduce their liens.

Medical expense liability which should be paid by worker’s comp carriers is routinely denied and shifted to other medical pay sources, at a cost to all of us.