CDMS Workers' Compensation and Claims Management 2 — Questions and Answers
Question 1: What is the primary purpose of a 'reserve' in a workers' compensation claim?
- To fund the injured worker's attorney fees
- To estimate the total projected cost of the claim for financial reporting (Correct answer)
- To set aside money for future OSHA penalties
- To pay for ergonomic workplace modifications
Correct answer: To estimate the total projected cost of the claim for financial reporting
Reserves are funds set aside by the insurer or self-insured employer to cover the estimated future costs of an open workers' compensation claim.
Question 2: Which term describes a workers' compensation claim that is disputed by the employer or insurer?
- Delayed claim
- Controverted or denied claim (Correct answer)
- Subrogation claim
- Consequential claim
Correct answer: Controverted or denied claim
A controverted or denied claim is one where the employer or insurer disputes compensability, causation, or benefits owed.
Question 3: What is subrogation in the context of workers' compensation?
- The process of permanently settling a claim for a lump sum
- The insurer's right to recover money paid from a liable third party (Correct answer)
- The transfer of a claim from one insurer to another
- A technique used to reduce fraudulent claims
Correct answer: The insurer's right to recover money paid from a liable third party
Subrogation allows the workers' compensation insurer to sue a negligent third party to recover benefits already paid to the injured worker.
Question 4: An injured worker's average weekly wage (AWW) is used to calculate which workers' compensation benefit?
- Permanent impairment rating
- Indemnity (wage replacement) benefit amount (Correct answer)
- Medical fee schedule payments
- Vocational rehabilitation stipend
Correct answer: Indemnity (wage replacement) benefit amount
The AWW, typically based on 13–52 weeks of pre-injury earnings, is the basis for calculating the indemnity benefit amount.
Question 5: Which workers' compensation classification applies when a worker can perform some but not all pre-injury job duties?
- Temporary total disability (TTD)
- Permanent total disability (PTD)
- Temporary partial disability (TPD) (Correct answer)
- Scheduled loss of use
Correct answer: Temporary partial disability (TPD)
Temporary partial disability (TPD) benefits compensate for wage loss when a worker can perform modified or light duty at reduced earnings.
Question 6: What is a 'compromise and release' (C&R) settlement in workers' compensation?
- An agreement for the worker to release medical records to the insurer
- A lump-sum settlement that closes all or part of a claim with finality (Correct answer)
- A modified-duty return-to-work agreement between employer and employee
- A voluntary agreement to attend vocational rehabilitation
Correct answer: A lump-sum settlement that closes all or part of a claim with finality
A C&R is a full and final settlement where the worker accepts a lump sum in exchange for releasing the employer/insurer from future liability.
CDMS Workers' Compensation and Claims Management 2
What is the primary purpose of a 'reserve' in a workers' compensation claim?