Report: The Rise of Cost Containment Industry in Workers’ Comp.

Non-profit news organization ProPublica has been doggedly covering the issue of eroding workers’ compensation benefits throughout the country in recent

Now, in a recent report, an investigation sheds light on the explosive growth of an industry that is thriving off “cost-cutting” workers’ compensation benefits. These companies,¬†billing themselves as “cost containment” entities, offer services ranging from negotiation of medical bills to claim management to arrangement of medical providers, defense lawyers and expert witnesses in workers’ compensation cases. All promise to lower costs for companies by “getting workers¬†working again more quickly.” But the reality is, these companies are raking in enormous profits and wield tremendous influence on the outcome of workers’ compensation cases – often to the detriment of workers.

As evidence of this cottage industry’s success, ProPublica detailed one of the 150 or so national conferences the industry holds annually – about one every other day. The scene: Las Vegas. Acrobats dangling from the ceiling. Neon lights. Techno music. Scantily-clad female dancers on poles. Open bars and free chocolate truffles. Designer handbag giveaways. Free Hummer limousine rides. Photo-ops with Olympians and celebrities. Rock star performances. And a live alligator.

What’s troubling about this excess is not necessarily that people are making money. It’s the way they are doing it. The thing is: Workers’ compensation is supposed to be simple. You get injured at work. You file a claim. You get benefits.

It’s understandable that employers and insurance companies would want to verify claims, but the rate of fraud is extremely low. In fact, Inspector General’s reports indicate just 1 to 2 percent of all workers’ compensation claims are fraudulent.

Plus, nobody is getting rich of workers’ compensation. Workers who are hurt receive a fraction of what they did before the injury or illness.

But these companies – they are getting rich. Reporters noted these conferences hosted 26 golf tournaments last year. At one expo, they were giving away Apple watches, a Vespa scooter and bottles of bourbon. Attendees received shoe shines, free massages and free services from a caricature artist.

At not one of these events, ProPublica reported, were injured workers invited to come speak. This is despite the fact that injured workers are at the core of what these companies do and what they purport to care about.

In California alone in 2014, insurance companies doled out $471 million to cost containment companies. That is more than double what they paid for those services in 2005.

Those who work within the industry insist that without cost containment firms, fraud and abuse of the system would shoot up quickly. But again, fraud was only ever a small part of the equation, even before these firms were on the rise.

More likely what these companies are doing is saving money by directing workers to the cheapest doctors – the ones who are also more likely to say injuries weren’t work-related, thereby reducing a company’s responsibility to pay those medical expenses and putting the worker in a position of having to fight for it.

When that happens, workers need an experienced workers’ compensation attorney by their side to counter it.

If you have been injured at work, contact the Lee Law Offices at 800-887-1965.

Additional Resources:

‘All of This Because Somebody Got Hurt at Work,” Dec. 29, 2015, By Michael Grabell, ProPublica

More Blog Entries:

Teen Worker Dies in North Carolina in Woodchipper Accident on First Day on Job, Dec. 29, 2015, Winston-Salem Workers’ compensation Lawyer Blog

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