Keefe, Campbell & Associates, LLC

Editor’s comment: We feel claims and risk managers should always look for the “Alphas” among the defense bar to assist and counsel you in difficult litigation. In the Illinois’ workers’ compensation, employment law and general liability legal community, risk/claims managers are always faced with an arena that is filled with trepidation and concern. We have heard of claimant attorney after claimant attorney who bullies, badgers and sometimes even screams at adjusters and claims handlers seeking to be Alphas and thereby get their way. Claimant lawyers are not shy to point out their political ties and fund-raising efforts and “clout” in the judicial and administrative arenas. We are also amazed at how many times we get questions from claims adjusters who are completely befuddled because an attorney on the other side has passively confused them or actively misstated case law or the Workers’ Compensation Act or Rules.

In social animals, the Alpha is the individual in the given community holding the highest rank. Other members in the same social group may exhibit deference or other symbolic signs of respect particular to their species towards the Alpha. In the animal world, Alpha animals are given preference in food and all other benefits. Other animals in the community are usually killed or ousted if they violate this rule. The status of the Alpha is often achieved by means of superior physical prowess. The individual in the Alpha position usually changes to a Beta when another challenges it to a fight and wins.

In the world of lawyers, the Alpha defense lawyer is the one who brings a number of critically important assets to our hopefully-less-than-deadly battlefield. An Alpha defense lawyer will regularly demonstrate:

• Above-average or superior intelligence;
• Current knowledge of all applicable case law and legislative developments;
• An understanding of political factors that may affect outcomes;
• They are very responsive and accessible;
• They are intrinsically cost-effective in their approach;
• They can provide realistic expectations;
• They anticipate regular or typical developments;
• They render unpredictable litigation as predictable as possible.

You may also note these same attributes apply to claims handlers. We are confident corporate risk managers who oversee Illinois claims are looking for Alpha claims handlers who are willing to stand up for themselves and obtain best possible outcomes in all their claims. It is a rare and beautiful thing to see a veteran claims manager who knows the respective litigation system like a book and is willing to stand up and be counted in the fight. As we have said many times, it is critically important for the adjuster to “pay the good (or bona fide) ones, fight the bad or questionable ones and know the difference.”

Going back to members of the defense bar, most important in finding the “Alpha” in any Illinois defense lawyer is their willingness to participate wisely in the battlefield. Every risk/claim manager has to be confident their selected attorney is willing to fight for you and present themselves in any fight in a fashion you would present it. Trust us; there are a lot of lawyers out there who are afraid of members of the Plaintiff/Petitioner bar and similarly cower in front of some of our brilliant but challenging judges and Arbitrators—that sort of lawyer is clearly a Beta or less. There are a lot of very solid and successful claimant attorneys who will push and push as the Alphas of their side of the bar. On the defense side of the matrix, you need someone with a lot of spine to sit up, properly prepare and seek the best possible outcome in this difficult state.

All defense lawyers in our hierarchic legal community have a certain rank. Three of these ranks have attracted special attention in etiology and been given special names: Alpha, Beta and Omega. We feel Beta defense lawyers are the second-tier and routinely lose to Alphas on the other side. We feel they are men and women defense lawyers who are difficult to reach, ill-prepared, afraid of the fight and always willing to rapidly settle any claim.

Finally, Omega defense lawyers refer to the lowest caste of the legal hierarchical society. An Omega defense lawyer is subordinated to all others in the community. We are told some members of the in-house counsel community may fill this bill while we are also certain many members of house counsel staffs range from Alphas to Omegas, like every other hierarchy.

If you have any questions or comments, please forward them to our resident Blog Administrator, Arik D. Hetue, J.D. who can be reached at ahetue@keefe-law.com or post them later today on our award-winning blog at www.keefe-law.com/blog.

Editor’s comment: We sent this to one of our readers and thought we should share it with all of you.

Summary:

1. Open claims generate new claims.

2. Your defense witnesses and defense case-in-chief may disappear.

3. Reserves sit and mess up your cash position and/or credit lines.

4. Costs and exposures rise as claims sit.

5. Doctors, doctors, doctors.

6. Why reward defense lawyers who don’t close claims effectively?

Open claims generate new claims.

The more claims a company has pending, the more employees you may have with pending claims. Those employees start to look at workers’ compensation claims as money in the bank with solid long-term potential. They know they will cash in some day and usually get the highest possible return in a state that usually rewards old claims.

When they see even a soft-tissue strain/sprain, the same employees are also likely to tell other employees to start “workers’ comp bank accounts” by filing whenever the other employee has an injury. They will caution their friends to expect to have to wait but also expect they will get a nice bonus some day when the case finally comes to a close. In the interim, the employee coaching new employees to file claims may also tell them to get lots of treatment to insure a solid outcome and settlement.

Employees with pending claims also know claimant lawyers. In Illinois, those lawyers give out business cards and may give “bonuses” to claimants who bring them more claimants. We would bet veteran risk managers see lots of the same lawyers handle claim after claim against your company—this demonstrates there may be a “mole” or “shill” at your facilities who are directing employee after employee to the same attorney.

You may be able to prevent all of it with a litigation avoidance plan and more aggressive litigation management approach.

Your defense witnesses and defense case-in-chief may disappear.

If you don’t push claims to closure, your defense witnesses and defense case-in-chief may disappear. We have seen bona fide disputes and strong cases made to refute any claim for benefits completely erode and potentially disappear when cases are allowed to sit for months and years. People come and go in your organization with expected rapidity—we are a mobile society. While you may have a willing supervisor or co-employee ready to testify and completely rebut a claim of injury this month, in three years or more, such individuals may be half-way around the world or retired or simply lose any interest in the matter. All of it works to the detriment of the company and not claimant.

Any veteran defense attorney will tell you even the most conniving claimants will typically remain interested in the case while it is pending. Claimants have a strong financial interest in a phony claim. Due to the financial potential, they are typically going to remember their stories and the “plot line” in a phony case. In Illinois, it is incumbent on the employer to locate and obtain the return of your defense witnesses to testify if you are going to maintain denial of a disputed claim. The longer you let a major disputed case sit, the lesser your chance of having the ammunition needed to demonstrate the dispute to the Arbitrator. Many veteran claims managers in Illinois have paid claims they know they might have won if the witnesses were present and testified consistent with their prior statements—this potential makes it imperative to try fully disputed cases earlier rather than later.

Reserves sit and mess up credit lines.

There is no question the more claims you have pending, the higher your reserves may be. Any accountant will tell you that your company is going to have to keep monies set aside, in either cash or lines of credit to reflect the loss and potential payout. When a company has numerous pending claims, the reserves clog up cash or credit that can be used for much better things. This year, we audited claims for a major hospital chain. They have several million dollars in reserves sitting for 3-5 years awaiting claim closure. Many of the claims were simple and undisputed matters but the corporate powers-that-be didn’t take action to move the files. This is what we assume you may be doing in handling claims.

So for one example, this hospital group had a claimant with a broken hand. The case had a settlement value of $15,000. The reserves were for “worst-case” value of $40,000. We took a look at the file, knew opposing counsel, called the attorney and settled the matter in ten days for $15,000. In doing so, we freed up $25,000 in reserves. If you assume the hospital group had 75 similar claims and we could work to close all of them in the same fashion, we would free up almost $2,000,000 in reserves by simply paying fair value on accepted claims.

Costs and exposures rise as claims sit.

When claims are allowed to intentionally age in Illinois, they usually age poorly. Claimants like to get lots of medical care to justify the value of the matter. Claimants will try to stay off work longer to insure they get the best possible outcomes. Some injured workers will also seek restrictions and limitations on their work as the years roll on.

We have seen a number of rulings in Illinois where hotly disputed claims finally get tried after two, three, four years of fighting. The employer or insurance carrier appeared to be making efforts to “wait out” the current liberal administration. When the matter finally got tried, the employee was awarded years and years of disputed TTD. For most of your employees who have generally favorable rates, an award of three years of TTD can force you to pay $100,000 or more in benefits. We feel you are much better served to drive to drive claims to rapid resolution to bring more predictability to the outcome.

We also hate to see hotly disputed and denied claims sit to the point the injured worker can come to the Commission and cry and moan about being broke due to the actions of the employer. The liberal administration likes to penalize employers and reward big money to such claimants in a punitive fashion. It can all be avoided simply by bringing the matter before an Arbitrator sooner rather than later.

Doctors, doctors, doctors.

We feel Illinois has a cadre of treating doctors who are notorious for over-treating patients. These doctors will order lots of tests and esoteric surgical procedures. If the patient keeps showing up and complaining the doctors will perform lots of trimming and then start replacing joints or fusing backs/necks. The medical costs can quickly escalate into the mid six-figure range.

These doctors/surgeons are very well-known in the Illinois workers’ compensation claims community. They have learned the system won’t typically slow them down and they expect to get paid under Illinois’ favorable WC medical fee schedule. Every veteran claims manager and defense attorney has used independent medical examination and utilization review to try to slow these physicians/surgeons down.

However, the best way to shut them off is to close accepted claims quickly or fight disputed claims faster. The best thing about Illinois workers’ compensation is you can effectively close medical rights if the employee has left your organization at the time of settlement.

Why reward defense lawyers who don’t close claims effectively?

We have learned over the years of auditing defense files and handling claims that defense lawyers love clients who will sit on claims. The costs of sitting on claims are a boon to the defense industry. There is no question the longer a claim is allowed to sit idle, the more your legal fees increase.

Such lawyers are thrilled to call and meet and regularly entertain such clients. They are hoping to keep making more money and get similar rewards as the years roll on.

To the contrary, we feel lawyers who get to the point and win or settle cases effectively are the sort of legal talent that should be rewarded and nurtured. Litigation is uncertain and expensive. The less litigation a company has, the more predictable your costs are. It is a challenge to close litigated files in Illinois but the harder a company works to close them and avoid what caused the litigation in the first place, the better suited you will be moving forward.

How to do it

Keefe, Campbell & Associates is devoted to closing WC, GL and EPLI claims faster than our competitors. We have an Illinois litigation management plan that should allow you to

• Avoid litigation in accepted claims in the first instance;
• Make every possible effort to keep your injured workers away from lawyers where possible;
• Focus on implementing pro se settlements whenever prudent;
• When the worker goes to a lawyer, move quickly to bring the matter to closure via trial or settlement;
• Conduct “settlement days” for litigated claims at the Illinois Commission to induce file closure;
• Conduct claim “exit interviews” to see if you can learn from the issues that led to litigation and lawyers and avoid it moving forward.

We would be happy to outline the overall approach for any of our readers. If you are interested in these suggestions, please let us know. If you know any defense competitor in Illinois that closes claims faster, please let us know how they do it!!!

Editor’s comment: We were surprised to hear former Chairman Dennis Ruth made a comment at a state-wide presentation about wanting open disclosure of defense counsel fees. His point was claimant attorneys had to disclose their fees to the Arbitrators so why shouldn’t defense attorneys? In response to Chairman Ruth’s unprecedented suggestion, one pundit suggested all WC attorneys across the state should have to post their tax returns on the web so we can see who makes the real money in workers’ comp and who doesn’t.

The Florida claim we mention began with a claimant who was a certified nursing assistant for a health care provider in Florida. While helping to lift a patient, she allegedly suffered a uterine prolapse, which required a hysterectomy. She filed for workers compensation benefits, but her claim was denied because the carrier felt the condition was not work-related. We assure all of you we agree with denial.

Based upon a favorable independent medical exam, claimant prevailed on appeal and was awarded $3,244.21. The award was not the issue—the claimant attorney filed an appeal of the award of attorney fees to the Florida Supreme Court.

Under the most recent reforms to the Florida comp statute, attorneys are supposed to be paid according to a very simple schedule. Based upon the award of $3,244.41, her attorney would collect $649 under the schedule. Most defense observers would suggest the attorney think carefully before taking such a tenuous claim. The attorney then claimed 80 hours of legal work went into the file and counsel complained it would be an hourly rate of $8.11.

The Florida Supreme Court then went to a long-time Florida WC tradition. They found “ambiguity in the statute.” Having looked for and found “ambiguity” in what seems to be a very clear fee schedule, the Supreme Court then began to try to find some way to increase claimant counsel’s fees. In rooting around for a strategy, the court noted defense attorneys billed $16,000—we don’t agree such fees should be disclosed as public record and broadcast on the web. The court then reasoned if you multiply the claimed 80 hours of work performed by claimant’s attorney with the court’s view of a “usual and customary fee of $200 per hour,” the resulting fee would be about $16,000.

So what did they do? The court ordered the insurance carrier to not only pay their own defense attorney’s fees; they also ordered the carrier to pay claimant’s attorney $16,000 in fees for securing a $3,244 settlement! So the resolution of this quizzical and disputed claim results in the carrier paying $3,244.41 to claimant and $32,000 in attorney’s fees!! The Florida insurance community is naturally buzzing with outrages at such an outcome.

There are so many things unwise about such a ruling and the legislation that fostered it, it boggles the mind. First and foremost, we point out the vast majority of claimant attorneys make lots more money that defense attorneys so the courts don’t need to “even the playing field” by trying to award equal fees to claimant attorneys when they take on marginal workers’ compensation claims. There is an adage in workers’ compensation that you make $500 per hour on the average as a claimant attorney and $100 per hour as a defense attorney. Those economics make some of our defense competitors “cross-over” to quietly do both defense and claimant work and causes problems with their loyalty to the defense side of the force in complex legal battles.

How do claimant attorneys make bigger bucks? Well, please understand many litigated claims don’t have defense attorneys. The cases are settled by claimant counsels directly with the insurance adjusters. The claimant attorneys and adjusters love this setting because there is no “interference” from defense attorneys who sometimes worry about the law and rules. The claimant attorneys make millions in such settings and clearly don’t expend thousands of hours in doing so.

Even when the matter is in litigation, claimant attorneys may also settle major claims in many states and get very substantial fees with very, very little time expended. We know of one case where a claimant attorney got a single phone call from a claimant, signed him up via mail, made one call to an adjuster and settled a wage loss claim and got a fee of $25,000 in about a week. When that happens, in contrast to the silly claim about making $8.11 per hour above, the attorney isn’t going to the courts or anywhere else to complain his fees are too high.

Next, in Illinois and most states, something has to be done about claimant attorneys taking what we call a “Seven Dwarfs” claim—workers compensation claims that are dopey, goofy, sleepy and silly. As we have pointed out many times, it doesn’t cost anything to file even the most bogus and unfounded workers’ compensation claim. Right now, KC&A has at least five pending hotly disputed WC death claims that range from questionable to completely unfounded. By that we mean, we are sure claimant is dead but we have no idea, none, why claimant’s counsel feels the death might be in any way related to work. What is happening with all five of these claims is the “status call dance” that infuriates our defense clients.

The “status call dance” begins with defense counsel writing letters to claimant counsels for several years asking for medical and/or accident documentation. The cases roll and roll on the Illinois status calls until the Arbitrators start to get firm about continuances and demand claimant counsel take some definitive action, such as disclosing experts. Please also understand disputed death claims where no benefits are paid are arguably “emergency” hearings at every status call because there is a widow(er) and possibly children not receiving benefits. We point out to our readers; competent claimant attorneys should not even file a death claim until they have expert medical opinions in place. As defense attorneys have to travel to and attend hearings across the state, we have to bill our clients and ask them to be patient while the claims age badly.

When and if our opponents get solid to slippery documentation, we can then try to close the files via settlement or hearing. Please note we sometimes settle disputed death claims for $3,200 like the uterine prolapse claim above. But if we have billed $5-10,000 to track the file for the years claimant’s counsel fools around doing nothing and we then have to get defense experts and depose them, we assure our readers our defense clients aren’t happy with us and they are furious with opposing counsel. We assure you they would be even more furious to have to pay attorneys on both sides to simply appear in court repeatedly when nothing but nothing is happening other than claimant’s counsel is not prepared and shouldn’t have brought the claim until it was ready.

So we ask the question, is the Florida Supreme Court ruling bad for workers comp? Some observers note claimant attorneys might reject some small cases and this may be felt to be bad for claimants. We point out this is a critical aspect of keeping workers’ compensation costs down—we don’t need dopey, goofy and silly claims clogging the dockets so injured workers with bona fide claims have to wait. The more dumb claims we receive the more we want to ask our legislators to institute a filing fee so claimant attorneys have to have some rational basis to file and manage litigated claims. But whatever happens, it is a bad, bad idea to double-penalize insurance carriers for disputing questionable claims.

If you have questions or comments, please send a reply.