According to Comparative Performance Monitoring (CPM) data, disputes occur in around one in eight claims in Australia.  The same report indicates  the average expenditure for a claim dispute is $11,970 for legal costs and overheads.

One of the largest workers compensation insurers in the USA estimates disputed claims are almost five times more expensive than non-disputed claims.  

Disputes increase the likelihood of a prolonged and expensive claim. Disputes can have an impact on productivity and the morale of other employees in the business, as well as the perception of the business by the public. 

Before commencing with a dispute, it’s important to weigh up the pros and cons. Here we discuss the costs of disputes.  

Medical Reviews

Independent Medical Examinations (IMEs) are generally arranged if there is a dispute about work contribution, the severity of the illness or injury, the work capacity, or treatment. These are generally conducted by qualified and approved medical practitioners. 

When cooperation is lost and the claim is not progressing smoothly, more than one IME may be required.  The cost of IMEs varies according to the jurisdiction, but generally costs $600 to $1800. The cost of the injured worker getting to the appointment also needs to be covered. 

If the claims needs to be reviewed by, for example, the Medical Panel in Victoria, as part of dispute management, the panel review may cost $5000 to $8000.  

Investigation Costs

If a worker is suspected of being less injured than they claim, a private investigator might be deployed to obtain evidence. This generally costs between $2,000 and $3,000, but could be more.

If an injured worker knows that they are being watched, they may be less inclined to participate in their pre-injury activities. This can result in slower recovery due to reduced exercise, and the employee may become stressed or depressed, leading to a secondary claim.

Dispute resolution

There are differing dispute resolution mechanisms in different jurisdictions, from Conciliation in Victoria to a Tribunal in some states to the Administrative Appeals Tribunal for Comcare cases.

The worker can generally seek reimbursement from the agent for their time and travel costs, including parking, however their support people such as an assistant, family members or others may not. 

Preparation and attendance time should be factored in, for the employee and the employer and claims manager.

There may be an agreement reached which effectively deals with the dispute.  In other circumstances there may be a decision made, with one party ‘winning’ and the other ‘losing’. 

If the dispute is ‘won’ by the insurance company or employer, the result may be reduced immediate costs but a disenfranchised employee / claimant.  If the dispute is lost, then the injured employee remains disenfranchised and their return to work is likely to be delayed.

Court

If the issue is taken to court, there may be additional costs depending on the judge’s decision regarding compensation and the awarding of costs.

Regardless of the outcome, animosity has generally been created and there may be a delayed return to work.

Impact on injured workers

The dispute process is by nature adversarial. It’s not collaborative. The return to work process, is by its nature, collaborative in order to be successful. Regardless of the outcome of the dispute, it is likely to make the worker’s return to work more difficult as they recover.

Disputes also cause the worker to need to ‘prove’ how injured they are. This is ongoing, and disempowering for the employee. It can have many negative impacts on the worker’s psychology as well as their rate of recovery.

While the dispute is being resolved, the worker may remain out of work. This can contribute to poorer health, along with many other negative financial and family consequences.

Summary

There are some situations in which claim disputes are appropriate. 

By keeping in mind the downsides and costs of disputes, employers and claims managers less likely to dispute claims.  In short, disputing a claim can commonly add $5,000 to $50,000 in claim costs.

This is worthy of discussion in each claim where the employer or claims manager is dubious about the case or claim.  And it is a worthy discussion for rehabilitation professionals to have with employers, particularly if the rehabilitation professional can identify more constructive approaches to improve the employee-employer relationship.