Tribal Workers’ Comp Claims – The Tail that Wags the Dog!

Tribal Workers’ Compensation costs can get out of control, especially when it comes to open claims.  How many times has your casino or other tribal enterprise had a work comp claim that dragged on for multiple years?  Those long-tailed claims have become more and more common, due in part, to manipulation of the system.  Workers’ compensation was originally designed to guarantee employees that they would receive care if injured on the job.  However, statutory coverage prescribed and regulated by the state has paved the way for unbridled abuse.  A simple work related accident that should have been resolved in just days or weeks can many times go on for years.

In a recent meeting with one of our casino clients, we were discussing their current, open, work comp claims.  We found that there were several claims that were open-ended with long-tails.  As we analyzed these claims, we came to the conclusion that there are several things that can be done to minimize their exposure to these types of claims in the future. 

A work related injury that is treated and resolved quickly can seem expensive at first, but that is what work comp is for.  It’s not the front end cost of the claim that you have to worry about.  Rather, it is when the claim spins out of control and develops a tail that goes on into the unforeseeable future that you have cause to be concerned.  But what would cause that to happen?  First of all, let’s look at who stands to benefit from a long-tail claim. 

State regulated, statutory work comp coverage provides doctors and lawyers with job security.  If you think about it, what incentive do doctors and lawyers have to expedite closure of a work comp claim?  Absolutely none!  In fact, the opposite is true.  Doctors and lawyers make a living through repetitive business.  One office visit with a doctor is inexpensive, but ongoing checkups and tests can really add up.  Similarly, a single consultation with an attorney may only be a few hundred dollars, but a work comp settlement can be tens or hundreds of thousands of dollars.  And yet, these doctors and lawyers are empowered to define the length and necessity of care for the injured worker.  Does that seem right to you?  Can you say, conflict of interest?  Now, I don’t believe that all or even most doctors and lawyers are unethical when determining needed care for their clients or patients, but the opportunity and financial incentives are certainly there.  I also recognize that most employees are not out to work the system or hurt their employer, but face it, it can appear financially rewarding to a low wage employee to use the system to get a paid vacation and a future settlement. 

You may think that abuse and manipulation of the workers’ comp system is inevitable, but it can be limited, especially in sovereign nations.  

What is the solution you ask?  It’s simple.  As a sovereign nation, you may have the right to adopt a Tribal Worker Benefits Ordinance in lieu of statutory workers’ comp.  Depending on your state compact, your federally recognized tribe may not have to comply with statutory workers’ compensation laws.  Even so, most tribes choose to provide some form of workers’ compensation coverage to protect their employees, as they should.  After all, your employees are an important asset to your business and you want them to be protected.  But, by adopting a work comp (tribal worker benefits) ordinance, your casino and other tribal enterprises can limit the risks associated with fraudulent or ongoing claims.  

There are many ways to limit your risk by using a tribal worker benefits ordinance.  First of all, you may choose to shorten the time allowed for reporting an injury.  For example, many fraudulent claims are real injuries but the injury did not happen at work.  That is why there are many claims made the first day an employee returns to work when the injury actually happened over the weekend.  There are many reasons for this.  One of the most common is the lack of money to pay the deductible on their health insurance.  It is easier to just say it happened on the job.  Second, you may choose to limit the types of injuries that you will cover.  I know of one tribes’ workers’ comp ordinance that says that repetitive injuries and mutual combat are not covered.  Those two simple modifications have saved this tribe a lot of claims over the years.  Third and probably most important, you can ensure that the choice of law is always with the tribal court or council.  This is essential to protect your tribal sovereignty status an not open your tribe to litigation in state or federal court.  And fourth, a very effective way to eliminate illegitimate or unnecessary long-tail claims is to give the claims department the ability to bring open ended claims before the tribal council or arbitration panel to rule on the claim.  They would have the final say and the claim would be paid and closed with no appeal, thereby eliminating unnecessary long-tail claims.  None of these modifications will strip your employees of protection for legitimate injuries.  However, they will give added protection to you the sovereign nation that employees them. 

What if your tribe does not have a work comp or tribal worker benefits ordinance?  There are still ways to help prevent and mitigate these ongoing, long-tail claims.  First, work with your tribal worker benefits loss control/safety services team to analyze your loss history.  Second, implement programs and procedures to prevent work related injuries from happening.  Third, commit to those safety programs and attach heavy penalties for non-compliance by management.  Fourth, work with your tribal worker benefits safety team to discourage doctors, treating your employees, from prescribing unnecessary extensions of treatment or observation.  Finally, implement safety incentives to encourage your employees to be your partner in safety.  For instance, one of our clients uses a pizza party reward system.  Another client uses part of their 1/3 annual safety rebate to provide an employee safety bonus incentive.  There are many ways to encourage your employees to take ownership of preventing accidents at work.  

As you can see, just a few simple tweaks to statutory workers’ comp by using a tribal worker benefits ordinance and/or implementing more proactive oversight of your current program can protect your sovereignty, minimize fraudulent claims, and limit your exposure to long-tail workers’ comp claims that can spin out of control.  I guess the point is, you have tribal sovereignty for a reason.  The constitution, treaties, compacts, ordinances, etc. are in place to ensure that you have the right to govern yourself.  Don’t let the state, your employees, or the doctors and lawyers benefiting from the system control how you run your business.  Return your tribal workers’ compensation program to the intent for which it was originally formed, to remove the need for litigation between injured workers and their employers.

Jason Watson is the National Administrator for the Tribal Worker Benefits program.  He can be reached at (800) 627-1555 ext. 4811 or lspencer@titusins.com .