Work Comp Paid Claims
I frequently get phone calls from prospective work comp clients whose claims are being paid voluntarily by the insurance carrier. They may have a question about their ability to seek medical treatment with a provider of their own choosing (they can, so long as 28 days have passed since their first date of treatment). They may want to check their wage loss rate to see if they’re being paid properly (work comp pays 80% of your after-tax wage, which is usually pretty close to 2/3 gross). Many times, they have questions about possibly bringing a negligence suit against their employer (they can’t, because work comp is the exclusive remedy against the employer for an on-the-job accidental injury).
Very frequently during these conversations, I get a question along these lines: “Ok, so you’re telling me that, as long as I keep giving them my doctor slips saying I can’t work, they have to pay my benefits.” And my answer is always, “well, they should, but that doesn’t mean they will.”
People are often shocked to hear that you can do everything “right,” and the insurance company may still deny your claim. It just doesn’t seem fair, and in many cases it isn’t; however, recall that if everything were fair in life, there’d be no need for lawyers and I’d be doing something different for a living. With that said, work comp claims seem to be denied more frequently and on thinner defenses than lots of other types of insurance claims. The reason behind that is the way the statute is written.
One of my biggest gripes about the Michigan Worker’s Compensation Act is that it does not contain a sufficient penalty provision for wrongful or unreasonable denials of benefits. If your work comp carrier cuts you off without good reason, my only recourse as your lawyer is to sue them (and the lawsuit may take 18 months or more to resolve). At the end of that lawsuit, even if we are completely successful on every portion of the claim, I can’t ask the judge for attorney fees. The biggest “slap on the wrist” the insurance company will face is a little bit of interest that barely outpaces inflation and, at most, an extra penalty of $1,500 (which is nothing for a big insurance carrier). So in reality, the only risk a carrier faces by cutting off a claimant is the cost of their own legal bills to defend the lawsuit, and maybe they end up paying a bigger settlement down the road because now they’re stuck with a judgment for benefits.
The minimal penalty work comp carriers face for wrongful denials of claims creates a perverse incentive to cut off legitimate claims or to “squeeze” legitimate claimants to try to negotiate a settlement. I see it happen in my practice all the time, and it is very frustrating. Often times, I end up advising my clients on what is most pragmatic rather than what is most fair. Unfortunately, unless and until our state legislature changes the law and adopts a penalty provision with real teeth, work comp carriers will continue to have significantly more leverage than claimants when it comes to paying and/or settling these cases.
