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When the Middleman Gets Involved with Workers Comp

Written by Ankin Law Office

Throughout the past decade, an alarming 33 states across the nation have passed laws that either reduce workers compensation benefits, make it more challenging for injured workers to obtain adequate medical care, or create hurdles for workers to even qualify for workman’s comp. While the State of Illinois seems to stand out from the crowd, increasing, maintaining or restoring benefits for injured workers each year, one problem with the system still remains- and it is growing in size.

In an effort to cut costs for workers compensation claims, many companies have begun to rely on a third party industry of middlemen that has begun to emerge across the U.S. This “workers comp industrial complex” as some call it offers an array of services that are supposedly intended to cut costs. These services include everything from managing workers comp claims to negotiating medical expenses. According to critics  the workers comp industrial complex is doing more damage than good as costs actually rise in some cases and injured workers are left to fumble their way through an all too complicated system.

As lawmakers across the nation continue to clamp down on workman’s compensation benefits that are paid to workers, as well as payments made to doctors, hospitals, and even workman’s comp lawyers, many injured workers are left to suffer. Unfortunately, many victims have been evicted from their homes, lost their vehicles, been denied medical treatment, and are forced to face other humiliating situations.

Sadly, very little scrutiny has been directed toward these cost containment firms who seem to have more influence on how workers compensation benefits are processed than even employers and insurance companies. As employers dish out an estimated $89 or more each year for workers comp, the middlemen are living it up. According to a recent report by, The National Workers Compensation and  Disability Conference & Expo which was held in Las Vegas in November of 2015 is a prime example.

The Expo was host to hundreds of vendors and headhunters who wooed insurers and company heads with extravagant parties, giveaways of expensive items like designer handbags and electronics, bottles of whiskey, free massages, and even a live alligator named Spike. Go-go dancers swung from poles, an acrobat dangled from the ceiling, and glowing aliens dressed in spandex posed for selfies. As numerous companies who provide networks of physicians, offer expert medical opinions and even review medical expenses attempted to entice the crowds, injured workers were left to suffer.

With more than 150 of these types of conferences held each year, it is no wonder that many workers compensation insurers spend more on overhead than they do medical costs for injured workers annually. In fact, some spend more than twice the amount that group health care plans are allowed to spend under the Affordable Healthcare Act.

Some of the star players in the field: Sedgwick, Genex, Helios, MedRisk, One Call and CorVec have become extremely powerful in determining how victims of work injuries are treated. Cost containment companies like these claim that they are effective in reducing excessive medical expenses, preventing unnecessary treatment, and helping employers manage long term claims.

Advocates for the workers comp industrial complex like Robert Hartwig, president of the Insurance Information Institute, claim that these cost containment companies play a vital role in managing workman’s comp claims due to the complexity of managing the system throughout 50 states. Hartwig asserts that these firms don’t just reduce costs, but they help prevent fraud and get injured workers back on the job more quickly. According to critics, however, these firms are more concerned about getting injured patients through the door and padding their own pockets- often at the expense of the employee.

Many of these firms recruit physicians and other medical care providers and negotiate discounted rates with them, then take a cut from the discount they offer insurers. Additionally, many of these companies quote inflated prices for medical services to insurers and then pocket the difference from the true charge.

Disturbingly, one of the most controversial niches in the workers comp industrial complex is the firms that provide networks of physicians. These firms often find the cheapest doctors and those who will very rarely agree that an injury is due to a work accident. Additionally, they provide physicians (many of which who are retired) to provide second opinions and make quick decisions without completely reviewing the patient’s medical history.

Unfortunately, while industries throughout Illinois attempt to take appropriate measures to control workers comp costs, and cost containment firms and their associates swarm in for the big bucks, in the end, it is the injured worker and his or her family who pays.