BKS Partners Workers' Compensation Blog

Wage Wars: How You as an Employer Can Mitigate Litigation Costs in Work Comp Cases

Posted by Tim Liberty on Jan 20, 2017 4:11:47 PM
Tim Liberty

With the Castellanos decision ruling the cap on attorney fees unconstitutional, the Plaintiff Bar has increased their filing of Petitions of Benefits (PFB). In speaking with some of our insurance partners, adjusters were receiving up to 5 PFBs per month. Post-Castellanos, they are receiving ten or more per month. That is a pretty dramatic increase. Remember, that anytime a PFB is filed, it triggers a state mediation. Therefore, adjusters would assign their own counsel to assist in responding to the petition and to represent them at mediation. Therefore, the cost of the expense portion of the claim will rise.

So what are the attorneys petitioning for? Workers’ comp provides medical and indemnity benefits and as expected, many petitions are requesting things like authorization of medical treatment, mileage reimbursement or payments of lost wages, but it seems like the Plaintiff Bar is especially targeting an adjustment to the injured workers’ average weekly wage (AWW). The AWW is calculated by taking the gross wages of the 13 weeks prior to the injury. The reason they are targeting this is because it is very easy to miscalculate. Given that attorney fees are no longer capped, if the employer/insurer miscalculate an AWW and the plaintiff attorney is successful in getting the injured worker a higher adjustment, they would be entitled to an hourly fee. For example, if the plaintiff attorney gets their client an additional $1 a week and spends 20 hours in doing so, they will receive a fee of $250+ per hour, or $5,000.

To avoid this exposure, it is critical that employers fill out the injured workers’ wage statement timely and accurately. One of the common complaints I hear from adjusters is that they have to send multiple requests for wage statements to employers. Therefore, the first few weeks would be paid on an estimation. If overestimated, the insurer would have to try and collect an overpayment. If underestimated, they open themselves up to litigation.

Have you ever recognized an employee by giving them a gift card? Did you know that if you have, that would need to be included in the wage statement? How about an injured worker who was out on FMLA during a portion of the 13 weeks prior to an injury, what do you do in that scenario? There are a ton of “what if” scenarios when filling out a wage statement. So, if you have questions, please contact your advisor who will work with BKS’ Claims Department and your insurer to help you fill out this greatly important document.

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The BKS Blog was written to keep you informed and help you learn about the changing landscape of workers' compensation insurance. These articles are written for employers who are researching additional information about changes, or looking to change their insurance partner.

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