Self-insured employers rely on third party administrators to manage their workers’ compensation claims, however when TPA mistakes are made who is liable? Mistakes which are violations of the self-insured rules, i.e. untimely payment of compensation, result in a Self-Insured employer being penalized with a self-insured complaint. Multiple self-insured complaints put the very privilege of self-insurance at risk. While some mistakes result in self-insured complaints, there are some mistakes such as the unauthorized certification of a claim, the authorization of treatment for non-allowed conditions which directly result in the increase of a self-insured employer’s claim costs.
TPAs are professional organizations, and can be held to a standard of care. TPAs carry errors and omissions insurance coverage, in the same way as other professionals, such as insurance agents, architects, engineers, doctors, lawyers, and dentists. Although TPA standard of care is very fact dependent, it requires a TPA to exercise the skill and knowledge normally possessed by members of the profession in good standing in similar communities.
When a TPA actions fall below the standard of care, it may seem like the only result is that employer pays, with no accountability for a mistake by the TPA. However, a covered occurrence may have been triggered under the TPA errors and omissions policy. A professional malpractice claim is like any other negligence claim in that it requires proof of a breach of standard of care resulting in damages.
If you believe that you are paying for claim costs due to TPA negligence, please call us for a free consultation.