CounseltoCounsel, April 2007 at 8, lays out a number of steps the legal department of McDonald’s has taken to improve oversight of workers’ comp claims (See my posts of May 19, 2006 #4 about the huge payments by the City of Los Angeles on workers comp and April 23, 2006 on workers comp metrics). The piece starts with a fact: “In most corporations, workers’ compensation claims are managed by the human resources, insurance or risk management departments.” McDonald’s has thousands of these claims, most of which are “garden variety.” Its lawyers, however, took a different view of the claims process.
Until 2006, a third-party administrator handled McDonald’s’ workers comp claims, until a review by the legal department disclosed that the company was spending “four times as much on [them] as on general liability lawsuits.” As part of the reason for the high costs, 140 law firms were handling the claims under a hodgepodge of selection methods and payment terms.
After the legal department agreed to take over the claims management process, it analyzed spending data and handpicked 40 law firms, generally one per state, and negotiated volume fee discounts. The department also “implemented a new national rate and/or flat fee schedule for each type of claim.” The next step was that the department set fees for specific tasks, like filing an appearance or attending a hearing. Finally, the department now monitors claims more closely and tries harder to get employees back to work more promptly. All of these changes – fewer firms and better economics, detailed schedules and more attention paid – have reaped considerable savings for the self-insured company.