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James Cool
James Cool
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Managing Workman’s Compensation Claims in a Recession: A Growing Challenge

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With economic woes taking the forefront in most news reports and conversations at the dinner table, it is no surprise that workman’s compensation claims have risen in correlation with layoffs. Some workers may attempt to remain on leave from a position and continue to collect worker’s compensation rather than return to an uncertain, and economically impacted, workplace. Others that have been laid off have filed claims afterward, seeking to use workman’s compensation as a way to make the ends meet after being laid off. There is some concern among employers and managerial staff that workers may attempt to draw out workman’s compensation claims when jobs have been downsized or might be eliminated. This growing challenge for employers and managers was supported by February’s job reports, which indicated an increase in claims.

The current recession is the longest one in 16 years – with unemployment rates being reported around 7.6%. About 600,000 jobs were lost in January alone. In a time where employers are concerned about staying afloat, many of them fail to realize that they may face increased liability for compensation claims as a result of the market’s condition.

State Division of Workers’ Compensation spokeswoman Patricia Ortiz-Wong said claims for workers’ comp have steadily declined in the past eight years, from 931,710 in 2001 to 553,770 in 2008. That trend is not expected to continue in the face of the current recession. Figures from the state also show that the number of claims climbed dramatically from 738,311 in 2000 to 931,710 in 2001, another recessionary period. One claims manager, Mary Anne Hernandez from Pan American Insurance Agency, Inc., predicted that claims and risk managers would see claims go “through the roof.” But other risk managers, such as Dave Dolnick from Brady Cos, a La Mesa Construction Company, was certain that most employees would resolve their claims as soon as medically possible. However, there are legitimate concerns about the extension of worker’s compensation claims. “What we have observed, both somewhat with our own [limited] claims and also in chatting with … peers, is that claims that are otherwise legitimate become much more difficult to resolve in this kind of a market, when the injured worker doesn’t have the option of a job to go back to,” Dolnick said.

New and reopened claims can be especially problematic to assess given these circumstances – even when the claim is legitimate and not solely the result of fear of job loss, downsizing, or a shaky market. This means that claims and risk managers are bound to be more vigilant than in more prosperous times. Businesses may reevaluate and extend their own insurance coverage, but it is more likely that businesses may revise and revisit job descriptions. Risk and claims managers may also be notified to require additional documentation and approach claims with increased skepticism. All of this means a harder road towards coverage for those with legitimate claims. If you have had a claim recently, it may be helpful to consult an attorney. Additionally, you may want to review and keep on hand a current copy of your job description, especially if you’ve heard that your employer is considering changes.