Understanding, Reducing and Managing Texas Option Attorney Activity : PartnerSource

Understanding, Reducing and Managing Texas Option Attorney Activity

By Richard S. Johnson, J.D., Executive Vice President, PartnerSource

Approximately five years ago, COVID-19 and its social/economic impacts dramatically altered the way in which employers and employees interact. Texas’ pro-business environment began attracting larger employers and more new residents, resulting in more overall workplace injury claims. At the same time, post-COVID employee culture shifted employees toward reduced conformity with traditional employer norms. COVID-19 caused smaller businesses to fail, resulting in the employees of those businesses joining larger companies and demonstrating reduced loyalty to their new employers.

Social media and technology have further influenced employee behavior by fostering individualism, impatience and divisiveness. This cultural change - paired with a misunderstanding of Texas Option law by newer, less experienced attorneys - has led to many legal cases having much longer durations and higher defense costs. Additionally, a few unusually high arbitration and jury awards have encouraged more attorneys and clients to pursue Texas Option liability cases, often with unrealistic expectations based upon the facts of these cases.

In the past year, plaintiff attorneys have amplified this trend by using artificial intelligence and third-party clearinghouses to target potential clients much more aggressively. At the same time, fear of nuclear verdicts has caused many excess insurers to issue questionable Reservation of Rights (“ROR) letters. These letters - coupled with increased insurer pressure on employers to settle cases – has caused some employers to settle for amounts disproportionate to the merits of those cases. This reaction has only encouraged plaintiff attorneys to target Texas Option employers even more, creating a vicious cycle.

WHAT CAN TEXAS OPTION EMPLOYERS DO TO REDUCE ATTORNEY ACTIVITY?

Fortunately, for PartnerSource clients the increase in new attorney activity has NOT resulted overall in increased arbitration award frequency or amounts. PartnerSource’s focus on proactive claims management and litigation avoidance puts our clients in a much better position to defend attorney claims when they arise. Texas Option employers can increase their odds of avoiding attorney activity by better managing areas that employers can control:

Safety – employers must conduct initial safety training specific to employee job tasks and keep accurate records for this training. Employers must then constantly reinforce (and document) safety training through ongoing hands-on training, new manager and refresher safety training, documented disciplinary actions for safety violations, and documented corrective actions after notice to management of safety hazards or accidents.
Proactive Claim Resolution – PartnerSource encourages employers, claims adjusters and nurse case management to provide early notice to us for claims involving permanent disability, potential benefit claim denial or similar situations that go beyond the scope of the Texas Injury Benefit Plan. Unlike workers’ compensation, Texas Option programs provide great flexibility for developing creative solutions for injured employees (such as direct settlements with claimants).
Coordination with Other Resources – Texas Injury Benefit Plan claims adjusters and Risk Management Teams should engage HR/Benefits/Leave Departments when needed before issuing a benefit denial. For example, before denying a claim for preexisting conditions, claims adjusters should already know if the affected employee has group health, disability, Medicare/SSDI, counseling, or other resources – and then help them transition to those coverages. Other solutions for helping employees (such as paying an employee’s group health deductible costs in exchange for a liability release) can often be all that is needed to prevent attorney involvement.
Redefining Benefit “Denials” – many claim adjusters will issue partial or full denials when such denials are arguably not required. ERISA regulations do not require denial letters for “circumstances under which benefits might be paid under the plan terms.” Texas Option claim adjusters should consider:
- Extent of Injury Letters – adjusters should always use medical management to determine as soon as possible the work-related injury vs. personal or preexisting conditions. Before getting a request for specific treatment, the claims adjuster can send a letter explaining to the claimant and treating provider what body part/conditions are related to the work incident. This type of letter should not have to reference “denial” (often confusing or upsetting claimants) or provide the normal ERISA requirements (Plan provisions, appeal rights, etc.).
- MRC (MMI) Determinations – when “closing” a claim, many TPAs will issue a benefit denial once a physician releases an employee from care or determines that the employee has reached Maximum Rehabilitative Capacity (“MRC” - like “MMI”). However, ERISA should not require this denial letter if the employee is not actively treating and does not have a specific pending request for medical care. Only if the employee is still actively treating, has a specific pending request for care (e.g. surgery request), or specifically requests benefits after reaching MRC should the claims adjuster have to then issue a benefit denial letter.

GOOD COMMUNICATION IS THE KEY!
Although these factors and recommendations contribute to creating/reducing attorney activity, the main reason that injured employees obtain an attorney boils down to short-sighted and poor communication with employees by an employer’s front-line managers, nurse case managers and claims adjusters:

Front-Line Managers - Plaintiff attorneys repeatedly tell us that their clients only retained an attorney because they felt that no one in the company followed up with them or seemed to care about them. Managers must have regular communication with injured employees that is honest, meaningful and compassionate. The injured employee should never be treated by managers as the “bad guy” for getting hurt at work.
Nurse Case Managers - Some nurse case managers will immediately cancel previously approved physical therapy or office visits once medical management has recommended an IME or physician peer review – often without first notifying the employee. These actions create animosity and distrust between employers and injured employees. These actions have also led to adverse arbitration awards by creating the perception that a pro-employer IME/peer review report is pre-ordained and not a fair process to the injured employee. The cost to allow an employee to continue conservative care pending an IME/peer review report is minimal vs. the cost of defense attorneys, arbitration and adverse legal outcomes.
Claims Adjusters - Texas Option employers must work with TPAs that understand liability exposure. Some claims adjusters may be quick to deny claims to “get the claim off their desk.” But quick denials cause claims adjusters to lose control of the claim – often before completion of a liability investigation. More of these claims are now falling back into adjusters’ laps – with a plaintiff attorney in control of what is now a much longer, expensive liability claim. Claims adjusters must therefore have regular, proactive and compassionate communication with injured employees and consider positive solutions for the employee before denying claims.

MANAGING ATTORNEY ACTIVITY

If you can’t avoid attorney activity, employers must (1) do a thorough liability investigation, (2) prepare a comprehensive, accurate workup of the case, and (3) then make an early, honest assessment of settlement vs. defending the case. If there is clear liability and a reasonable demand, employers should work towards early settlement at a fair case value. However, in the current environment, if the case is frivolous, the employer is often better off fighting the case. This strategy includes pushing back against pressure by insurers to make unreasonable settlements. At that point, it is critical for employers to work with PartnerSource to assign experienced Texas Option defense counsel and make the right arbitrator strikes for their case. Employers must also be willing to arbitrate the right cases and push back against insurer pressure vs. settling every litigated case and sending the wrong message to plaintiff attorneys.

Although the risk of a significant arbitration award is real, Texas Option employers must keep that risk in perspective. PartnerSource proactive claims consulting reduces the risk of a runaway award by ensuring proper communication and effective resolution strategies when a conflict first develops into a liability case. And, even with more aggressive plaintiff attorney activity, Texas Option employers continue to enjoy the benefits of better medical outcomes and cost savings.

If you have any questions or need more information, please contact Richard at (972) 239-4587 or contact your Team Leader. We invite you to also attend PartnerSource’s upcoming OneSource webinars focused on Litigation Outcomes.