Mega Claims Show the Value of Workers’ Compensation

Nancy Grover

(Sarasota, FL (WorkersCompensation.com) – The idea of a $10 million workers’ compensation claim would have been shocking just a few years ago. Now, a $40 million claim isn’t all that surprising. So-called ‘mega claims’ are becoming more numerous and more expensive — or, at least, more discussed. But the outcomes associated with them and the differences they make in the lives of the injured workers affected are nothing short of amazing.

“A catastrophically injured person under workers’ compensation has so much more available to them than under group health,” said Mark Walls, vice president of Communications and Strategic Analysis for Safety National. “Group health doesn’t fly you and your family to a Centers of Excellence rehabilitation facility; we do it all the time. Group health is not purchasing homes for people because their own homes can’t be modified. That’s the difference.”

The increase in workers’ compensation mega claims was among the top issues to watch in 2019 as cited in a recent Out Front Ideas webinar from Walls and Kimberly George, SVP of Corporate Development, M&A and Healthcare for Sedgwick. While these claims are expensive, they also point up a sometimes overlooked side of the workers’ compensation industry.

The Numbers

“Recent data shows an uptick in the number of mega claims,” NCCI reported in a Research Briefissued last summer. “For accidents occurring in 2016, 10 claims of at least $10M have been observed, more than for any of the previous 15 accident years.”

The report also said motor vehicle accidents and falls from elevation were the leading causes of mega claims, accounting for nearly 70 percent of them. Hospital inpatient and home healthcare services account for more than half the medical costs of mega claims. “This is in stark contrast to all lost-time claims, where most of the medical costs are for physician and hospital outpatient services.”

Falls, trips or slips account for 28 percent of the $10 million claims, according to a recent study by Willis Towers Watson. “While these may sound like minor happenings, evidence suggests that falls often occur from heights, which makes the potential for serious injury much greater and can also involve slipping on ice, which can result in major brain trauma.”

Multiple trauma was the most significant type of injury associated with mega claims, the report said. These accounted for 54 percent of the claims, followed by brain injuries, which account for 14 percent. Larger companies were affected more by mega claims than smaller ones.

The age of the worker on the date of injury is a “significant distinguishing factor between $2 million and $10 million claims,” according to the study. Of the mega claims involving workers under the age of 40, 75 percent were at least $10 million.

Cost Drivers

Employers who have high deductibles, or self-insureds with retentions routinely turn to excess carriers such as Safety National when they have catastrophic claims. Several factors are contributing to their higher costs, including:

  • Improvements in actions by first responders
  • Increased survivability of auto accidents
  • Medical advancements

“Accident survivability is up,” Walls said. “When you look at the training and the equipment available to first responders to be able to stabilize someone who is severely injured and get them to the hospital, change has really come a long way. We see claims where 10 years ago the person never would have made it to the hospital, and now they do.”

People who do survive horrific accidents are now able to function at levels previously unimaginable. “Let’s say someone has had a leg amputated,” Walls said. “It used to be he might have a prosthetic, which was a clumsy, clunky leg that was functional but very limited. Now that person may have several different prosthetic limbs; one for cosmetic reasons, one for jogging, one for biking … these are tremendous, but they are costly.”

For those who work with catastrophically injured workers, however, it is not a question of cost vs. patient care. “With these severe catastrophic claims the focus is on providing the best outcome possible for that injured worker,” Walls said. “So while there are always thoughts around cost control, that is really not what’s driving what we do; that outcome for the injured worker is driving what we do.”

A 20-year old quadriplegic who needs attendant care 24/7 can live a much longer life because of medical advancements. That may mean 40 or 50 years of care; but it also means the person lives a productive, functional life.

Companies that care for catastrophically injured workers will spend the money to see the positive outcomes. “We’ve bought houses for people because their living situation could not be properly modified to allow them to come home,” Walls said. “An example is somebody who lives in a double-wide trailer and is now confined to a wheelchair. We’ve worked to provide housing so they can return home because ultimately that will provide a better long term outcome, and you hope that also avoids unnecessary costs around complications and repeat hospitalizations.”

That’s a major different between group health and workers’ compensation. The level of care and coordination, with nurse case managers and expert physician reviews, makes workers’ compensation a much broader coverage.

Mega claims are indeed expensive and, in many cases avoidable. Employers and payers can prevent them by ramping up their safety efforts, especially as it relates to slips, trips and falls, and motor vehicle accidents.

But these claims are also proof that the workers’ compensation system goes the extra mile.

“Group health covers what the policy says, whereas workers’ compensation covers what is needed to cure and relieve what is related to the injury,” Walls said. “As much as people like to knock the industry, workers’ compensation does a much better job with catastrophically injured people than group health. It’s dramatically different.

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