Guarantee Insurance Discusses the SWARM System

In an interview with Claims Journal, Charlie Schuver, president of Guarantee Insurance Co., a specialty workers’ compensation insurer and subsidiary of Florida-headquartered Patriot National Insurance Group discusses a proprietary fraud-fighting system called SWARM – swift working assessment with rapid methodology.

Claims Journal: What is SWARM?

Schuver: SWARM is a rather simplistic idea that is extremely hard to execute. It is bringing all of the expert resources that are necessary to settle any type of workers’ compensation claim…at the first report of injury. They’re in every single claim. If legal needs to be involved, if subrogation needs to be involved, our belief is that if they’re not involved at the very outset of the claim, their ability to influence the claim is exponentially diminished the longer it takes.

So, sending a SIU team in to do a formal compensability study three weeks after the accident has occurred is almost a waste of time because none of the co workers really remember what happened. There are no pictures available of the exact spot where it happened, or the exact condition of the machinery that might have caused it or any of the things that we would look at as key drivers in the decision as to whether this is a worker’s compensation compensable injury or not.

We’ve patterned this process of what we’ve labeled the SWARM, which means all functions in, and they’re all in on every claim, and each of them have the responsibility not to waste anyone else’s time.

We very quickly get our arms around every aspect of every claim that comes through our system.

CJ: Are you talking about every claim?

Schuver: I’m talking about every claim. First report of injury, whether it’s a cut finger or a severed limb, goes through the exact same process, which, for us, is a very quick screening process. We’ve kind of leveraged technology. These people are all joined together. They’re operating 24 hours a day, seven days a week. If we get notice of a claim, every one of these functions is on the claim the instant that notice comes through the system.

CJ: When everyone is activated it becomes sort of a decision among everyone whether or not there are some red flags that need to be investigated further. Is that accurate?

Schuver: Exactly right. So, if subrogation is one of the key indicators, then the indicator or the flag that this is a subrogatable event would be recognized by a claims adjuster and probably a subrogation adjuster at the same time; or working together, they would have come to that decision and instantly subrogation is building their file.

Same for special investigations, for compensability or fraud, same for nurse case management.

CJ: How long has this been in place?

Schuver: We have been working under this model for all eight years of the history of Guarantee Insurance Co.

CJ: Because Patriot and Guarantee have been using this the whole time they’ve been in business, do you compare your results with the industry?

Schuver: Our comparison is with the industry average. We try and compare the different factors of performance with the NCCI [National Council on Compensation Insurance] annual statistical bulletin. It’s hard to say NCCI is the total industry because it’s only what the reporting carriers give to NCCI, that’s their basis.

We wanted to show that the ultimate cost to close by doing it this way is definitely an improvement; that the total cost including the upfront investment is going to be less than if the claim was just run through the standard industry approach.

We took our 2005 2006 accident year because 99 percent of those claims are closed. We know our ultimate cost, except for the remaining one or less than one percent in those two periods, and we compared it against NCCI’s ultimate cost to close. We’re somewhere between 20 and 30 percent reduced ultimate cost on those, on that level of comparison.

CJ: Are there any trends that you’ve identified that you think you’ve identified more quickly and been able to address?

Schuver: One of them is the abuses in the workers’ compensation system. I don’t want to say everything is outright claims fraud, although there is claims fraud going on and everybody knows it. There’s also a lot of just additional abuse that gets added to the ultimate cost of settling claims, if you’re not doing the front end level of screening that we’re doing.

Obviously, we see, as the industry has, the less healthcare there is out there, the more likely an employed worker who has an issue is, at some point, going to file a work comp claim. If it was a legitimate injury occurrence on the job, it’s further exacerbated by their health conditions. Or, in a lot of cases, it truly is a weekend injury that is showing up on the job because they don’t have healthcare and they do need some sort of medical attention.

As fewer and fewer people have healthcare available, or can afford to buy it, you see more bleed in to the workers’ compensation space.

We recognize more of that in that front end compensability review, where we do very accurate assessments. …If they can’t pin down the key qualifiers of this happened on the job and it’s a compensable injury, then everything gets pretty wishy washy, and the claim often goes away during the investigation period.

We see some of what we call medical direction. If you go into a hospital, the first form you fill out, almost the top question is going to be is this workers’ compensation?

We’ve had a number of times where the hospital administrator, whoever’s helping the patient, just tell them, “Just check workers’ compensation, because then we know there’s coverage, and you’re going to get in.” They’ve actually told the patient, “You’ll get the best service that way.”

When we do our investigation and the patient admits it wasn’t a compensable injury, the response is, “The hospital told me that’s what I was supposed to check. I’m not trying to commit fraud, but that’s the way the system seems to be working.” We definitely do see a trend towards growing abuse of the system and our job, of course, is not to deny legitimate claims.

No insurance company wants to make it look like they’re out just to collect premiums and not pay claims. We believe the policyholders paying the premium have the right to make sure that there isn’t a bunch of abuse going on under their system, because ultimately the cost of the process is in fact with the policy-buying public.

CJ: Do you have investigators?

Schuver: We have both internal staff in key areas of the country, and we have a vendor network that will cover anywhere. Within hours we can have somebody on site. That’s obviously key to this type of a process. The majority of them, the geographic spread where we don’t have a whole bunch of concentrated customers, we’re using vendors, but these are trusted vendors that we’ve set up a relationship with.

CJ: When you see a need for a change in the way something is done, how quickly can you get that through?

Schuver: Almost instantaneously. It does allow us to constantly tweak the process to make sure we’re getting the most out of all functions.

CJ: Having worked in claims before, I can see a couple of the beneficial aspects of SWARM. I’m not sure if one is more beneficial than the other. One is not having silos. Everybody is working together within the different departments. The other is getting everybody on it immediately. Do you think one is more valuable than the other, or do you think they go hand in hand?

Schuver: We see them as equal.

CJ: Is there any thought to selling it to other carriers?

Schuver: Yeah, right now, we operate as MGA and a TPA claims settlement for two other carriers that are strategic partners with us. Definitely in the long run, we could see this being spun off as just a pure standalone TPA with services available to other industry clients.

For now, Guarantee is planning technological improvements starting with the build out of its own base system, combining policy and claims, that will be rolled out within a few months.