South Australia’s workers' compensation scheme is plagued by high costs, low performance outcomes and “long tail” cases, which drag on without closure.

Robin Shaw argues that the scheme is struggling due to poorly designed legislation and inflexible case management. Although Shaw’s focus is on South Australia, his comments on claims management are informative for return to work professionals across the country.

The crux of Shaw’s concern is that workers' compensation claims are managed on a standard insurance model. An agent sitting in an office applies standardised criteria to a set of facts.

This system works well for claims about houses or cars, where quantifying damage is straightforward. A broken windshield will cost a similar amount to fix on every Ford Laser from 1994.

People, however, are not branded with makes and model numbers. Humans are complex, with different needs, different desires and different responses to injury. A catastrophic accident for one person could be a mere setback for another.

The workers' compensation legislation brushes over this difference. It sets up standard guidelines and criteria for assessing person injury, encouraging a process-based model.

This model also tends to move employers into the background. Rather than being actively involved in the compensation process, the employer’s individuality often goes unrecognised.

The rigid, unbending nature of mass management means that many cases fall outside of the rules, becoming “exceptions”. As the system is insufficiently flexible to deal with exceptions, these cases drag out to become the long tail.

One solution is to deal with exceptions proactively rather than retrospectively, trying to identify potential risks in cases before they block the client’s recovery or return to work.

Under mass management, the same information is collected about each claim. A case manager will ask what happened, when, how, why and who the employer is.

However, they rarely ask questions about human issues, like the nature of the employment relationship. If a case manager knows his client has conflict with her employer, he can seek to manage this issue before it affects the client’s return to work. Early recognition of risks can help ensure that only seriously incapacitated workers make it into the long tail.

What does this mean in practical terms? In order to detect potential risk factors, Shaw suggests case managers:

• Gather information on pre-existing issues in the worker’s personal life, including socio-economic factors, family situation, general health and personality traits;
• Request information about the industrial relations environment, particularly the economic health of the industry and the worker’s job satisfaction;
• Avoid system error, such as poor communication; and
• Avoid system generated issues, such as decisions that are legally correct but blatantly unfair.

For this approach to succeed, a case manager needs to have highly tuned interpersonal skills. The system itself needs to be flexible enough to make available the right support to the worker at the right time. The approach would require appropriate tools, added expense and a fundamental shift away from centralised control. It may also face community objections to personal information gathering.

In all, these reforms would be a substantial change to business as usual.

Shaw concludes that defects in the legislation play off against defects in case management to create a complex, expensive and rigid system.  Amending legislation would be one step towards fixing the scheme as a whole.

Yet return to work rates will struggle to improve until the case management process can accommodate the complex nature of human beings.