Author, Sam Clayton, Vice President, Construction Group, Rancho Mesa Insurance Services, Inc.
Workers’ compensation rates have fallen steadily over the last ten years, but businesses in California still pay the highest rates in the country. In addition, California has the highest frequency of permanent disability claims, the highest medical cost per claim, and the highest litigation rates per claim.
To mitigate the friction within the workers’ compensation system, California and several other state legislatures in the early 1990s developed legislation that would permit unions and management to jointly develop an Alternative Dispute Resolution (ADR) program or “carve-out” agreement that resolves disputes outside the state workers’ compensation system with benefits that are at least equal to the benefits required by the Labor Code.
ADR is an alternative to the traditional approach to workers’ compensation claims. With ADR, an injured worker will report the injury and then use the services of a neutral ombudsmen hired by the union trust who is knowledgeable in workers’ compensation law to quickly determine if the injury is work related. The ombudsmen will recommend to the injured worker the appropriate treatment and other benefits owed within the carve-out agreement.
Union ADR provides employers with flexibility to manage the overall cost for their workers’ compensation program by promoting voluntary agreement early on with the injured worker on effective medical treatment to reduce litigation over the scope of medical treatment. ADR can also provide an accelerated claims resolution, faster medical treatment and potentially quicker return to work for the injured employee.
This process limits litigation with the services of an ombudsman and, if needed, mediation and arbitration procedures designed to resolve the claim quickly and appropriately. Since this is a very specialized arena, workers’ compensation carriers typically have a separate claims division that are well versed in the nuances of ADR claims.
To find out if your workers’ compensation carrier offers ADR programs or to learn more, I can be reached at 619-937-0167 or sclayton@ranchomesa.com.