North Dakota’s Workers’ Comp Claims Handling Gets Passing Grade

Consultants who reviewed the claims handling of North Dakota’s workers’ compensation agency said they found no evidence it was unfairly denying worker benefits, while saying some aspects of the operation need improvement.

Supervisors should provide more assistance in managing complex injury cases, the consultants said, and the agency should do a better job carrying out “action plans” that include goals for returning injured employees to their jobs.

In separate meetings Wednesday with the Workforce Safety and Insurance agency’s board of directors and the Legislature’s interim Industry, Business and Labor Committee, the consultants recommended more training for claims handlers in determining whether an injury is job-related.

“The North Dakota workers’ compensation (law), in some instances, is open to interpretation as to whether a claim is work-related, or an aggravation of a pre-existing injury,” their report says.

The report by Chicago-based consultants for Marsh USA Inc., a multinational company, raised questions about whether some analysts are being assigned to manage claims that would be better handled by someone with more experience.

The consultants suggested that Workforce Safety fraud investigations, which have focused almost exclusively on suspected wrongdoing by injured workers, be concentrated instead on medical providers and employers.

Workers’ compensation fraud by employees is “pretty rare,” said Kathleen Dopkeen, a Marsh senior vice president. On the other hand, fraud by employers and medical providers is “much more costly,” she said.

The report examined 475 claims between Jan. 1, 2005, and Jan. 1, 2008, representing $6.2 million in benefits. Dopkeen, John Krutzler, a Marsh managing director, and Anthony Walker, a senior vice president, presented the study.

“From an overall standpoint … WSI is performing well,” Krutzler told WSI directors. “You’ve got a lot of good processes in place, a lot of good procedures in place. It’s execution, and a consistent execution.”

Walker said 111 of the selected claims were for medical benefits only, while 364 were for wage losses attributed to a work injury. Of the 364 wage-loss claims, 91 were denied, Walker said.

Walker told Rep. Rick Berg, R-Fargo, who is the House majority leader and the interim committee’s chairman, that there was no evidence of “blatant” or wrongful claim denials. Krutzler gave similar assurances to WSI’s board.

At present, a worker who is injured on the job may select his or her own doctor for treatment. The consultants suggested that WSI consider recommending a doctor with expertise in treating injuries on the job.

Dopkeen said the approach may help the injured employee return to work more quickly.

“It is worth looking at a little bit more closely,” she said.

“The leading practice is for the employee to go to the best physician for workplace injuries, and the best physician for workplace injuries is going to be different than your family physician,” Dopkeen said. “It’s a lot harder for a family physician to say, ‘No, I disagree with you, you have to go back to work now.”‘

The report listed 14 claims criteria, and said Workforce Safety recorded an overall compliance score of 80 percent, which was short of meeting best industry percentages.

“Industry standards, agreed to with major claim management companies, considers 85 percent to 90 percent compliance as meeting leading practices,” the report says.

WSI was listed as meeting or exceeding standards in nine of the 14 criteria. Its best performance was in filling out paperwork on new claims correctly, making benefit payments on time, communicating with injured employees and containing medical costs, the report says.

“The claims handlers consistently relied on appropriate medical documentation prior to paying medical bills,” the report says. “However, improvement is required to ensure approved medical bills are paid within 30 days or less.”

The Marsh report was one of two independent reviews commissioned by WSI at the suggestion of Gov. John Hoeven, who said he was alarmed by reports from the agency’s internal auditor that injury claims may have been improperly denied.

On Thursday, the WSI board and the legislative committee will examine the second review, which focuses on the agency’s management and personnel practices. It was done by Henry Neal Conolly, a former director of New York’s workers’ compensation fund.

Workforce Safety is paying about $310,000 for both reports.