Learning From Other States to Find Solutions for Claims Cost Containment, AI Adaptation, and More

California often sets the pace for policy and innovation—but it can also benefit from solutions implemented elsewhere. With 56 jurisdictions across the U.S., many have adopted practices worth examining. This session at the California Coalition on Workers’ Compensation’s Annual Conference: Legislative & Educational Forum explores best practices from throughout the country, addressing topics that include claims resolution, cost containment, real-world use of artificial intelligence (AI), and evolving regulatory approaches. Speakers included:

• Stuart Colburn – Attorney, Downs & Stanford, P.C.
• Gerald Hogue – Manager Workers’ Compensation, West Coast, FedEx Freight
• Mike Simmons – SVP, Human Resources, Risk Management, and Legal, WKS Restaurant Group
• Bill Zachry – Executive Director, CompSense

Automated Return-to-Work Engine

Certain AI powered-resources have empowered stakeholders in their claims processing. With AI assistance, an employer can segregate medical only and restricted duty claims instantly at first report. This allows an employer to send compliant transitional duty offers within hours of the initial injury, bypassing the standard delays that happen when this loops through the third-party administrator (TPA). This also helps to document their compliance with the interactive process required for the Americans with Disabilities Act (ADA) and the Family and Medical Leave Act (FMLA). Job descriptions for all positions along with pre-identified modified duty positions are all in a data library that is set up in advance.  

Flagging Comorbid Factors

AI can also help in scanning unstructured clinical notes to identify comorbid factors, such as diabetes, obesity, and mental health conditions. When these factors are identified, extra steps are taken in the management of those claims. This helps keep simple injuries from turning into massive claims. It also leads to better reserving earlier in the claims which shortens a claims development tail.  

Resolving Claims Faster

Open claims create ongoing expenses due to administration costs and potential litigation opportunities. If claims durations were evaluated it could provide feedback on the performance of TPAs and defense attorneys. Providing adequate settlement authority can often lead to a faster claims resolution. However, there needs to first be a complete understanding of the claim exposures, addressing the settlement realistically.

Colorado Medical Record Repository

In Colorado, medical records flow through the state electronically, including group health and workers’ compensation. This creates one central source for all medical records, which eliminates stakeholders having to send copies or waiting on medical reports. However, this system relies on the medical provider to submit all information since they are responsible for all reports. With one repository, injured workers typically experience faster treatment decisions, especially since medical providers have access to the complete picture of a patient’s medical history. 

Litigation Propensity Triangle

Claims metrics can detect early friction indicators that predict attorney representation before it occurs. Litigation prevention starts by focusing on the relationship between employee and their employer, in particular, their supervisor. Supervisor should be maintaining contact with the injured worker while they are off work, which can significantly reduce litigation rates. 

Identifying Potential Fraud with AI

AI can cross-check new claims within hours against historical fraud networks, allowing for timely investigation of potential fraud.

AI’s Use in Injured Worker Care

Some AI resources can assist with a medical provider selection based on outcomes data, instead of relying on a simple network membership. Currently, there are challenges in assigning more qualified physicians due to shortages in those available to treat workers’ compensation injuries.