Technology vs. Humanity

By: Hon. David Langham

Recently, a very topical and interesting discussion came across one of my social media feeds. It was distributed by William Zachary, an “industry thought-leader.” Despite that term being sometimes overused, Mr. Zachary is a true leader in that he listens as often as he speaks. Thus, when he does speak, we are well advised to pay attention. And, others in the community would benefit from listening as carefully as he does. 

In this posting, Mr. Zachary describes a recent speech delivered to attorneys that defend workers’ compensation cases. In it, he reminded about the methodology that is being engaged to analyze data. The medical community has been abuzz about this for several years. While data is nothing new, the fact is that computer programs and even artificial intelligence are increasingly being thoughtfully and imaginatively engaged to analyze medical and other claims data. With technology, payers can quickly, quietly, and thoroughly evaluate vast quantities of data. With algorithms at their fingertips, they can approach macro or micro analysis with ease. 

The results are providing those that pay for claims and care with objective illustrations of outcome in a variety of cases. That is not just which medical provider has the lowest price for a particular service or modality, but what happens to the overall cost of a claim when a certain treatment is performed by that provider. The “payer” community is therefore becoming increasingly adept at measuring the performance of care providers across the spectrum from primary care to surgery to therapy and beyond. As Mr. Zachary notes, the payers are interested in “which doctors produce the lowest total claims costs.” 

This is a critical distinction. It is possible that the same surgery might affect different costs if it is undertaken earlier in a case rather than later. There is the chance that certain other care might be an appropriate early intervention for some malady, while surgery is a last resort. Or, as likely, it may be that for some maladies early surgical intervention is more likely to produce favorable results. One path might minimize or exacerbate time missed from work, and therefore the indemnity costs associated with an injury. One might lead to shorter or longer recovery, more or less necessity for therapy, more or less resort to medication. Rather than focusing merely on the cost of the particular modality (surgery or alternative), this evolving “total claims cost” analysis approaches the question the “best care” from the standpoint of overall recovery and therefore overall costs. 

Mr. Zachary cautioned the defense attorneys that this same analysis is now beginning in the consideration of which attorneys will represent those payers in workers’ compensation disputes. He notes that the payer’s focus will shift from the “lowest attorney fees” for either a service or overall defense to “lowest claims costs.” Thus, the legal defense market may soon be evaluated based on how expeditiously and efficiently claim defense is handled. Mr. Zachary notes that “getting injured workers quickly back to work always produces the lowest claims costs.” Thus, the defense attorney may be motivated in the future to focus upon expediting that return to work. He notes that this is a bit counterintuitive as “return-to-work . . . has never been considered as a part of their (attorney’s) job.” His comments caused me some recall regarding attorney billing over my early career. 

In the distant past, a coworker was unexpectedly unable to work. I was asked to cover a scheduled event, which involved in locating a paper file regarding the case. I located the material on this attorney’s desk, underneath a timesheet. I noted the timesheet was completed, and started to carry it to bookkeeping. However, before reaching the office door, I noticed that time sheet was dated for the present day. The absent employee had created a timesheet documenting a day’s efforts in advance. I was shocked at this “predictive billing” paradigm, which evidenced eight hours of billed time on a day the employee did not even present for work. It reflected what this attorney intended to bill, recorded at some point before the work was ever performed. 

I recall another time in the equally distant past when I was encouraged by my employer to coordinate travel and other efforts to maximize “billable hours.” The idea was that if I were travelling to a distant town for an event (mediation, trial, deposition), that I should strive to schedule a second event in that town for the same date, but in a different matter. My employer suggested that the two hours of travelling should then be billed separately, and redundantly, to each of the two cases (more if possible). The two hours spent travelling “should,” I was told, be billed thusly as four hours. My employer described this as “efficiency.”

In the 1990s, I represented a company who utilized an agent (auditor) for the purpose of managing their Worker’s Compensation claims. This auditor later required all time entries on the bill to include parentheticals representations to reflect the actual time spent on each discrete task devoted to a particular case on a particular day. A partner in the law firm I worked for visited to explain to me how that requirement could be “leveraged” to bill more time to a file than was actually spent. His emphasis was that if they insisted on these parentheticals, that the attorney should itemize each miniscule task. “This was,” he confided, “what they get.”

During the same era, I was familiarized with a company that had negotiated flat-rate charges for its Worker’s Compensation defense vendors. This process involved a structured payment built around claim-life markers. A defense firm would be paid a flat rate of one amount for evaluation and recommendations on a case. It would receive an additional second specific payment in the event that a petition for benefits was/were filed. And, if the matter proceeded to trial, there was an additional sum paid regardless of outcome. The firm was expected to defend through closure based upon these flat payments. Thus, the more time invested by the attorney, the lower the rate of return. 

These are mentioned to illustrate that there are anecdotal examples of interesting billing practices, and payer reactions. Neither the perception of problems nor the desire to address it is new. There is also evidence of billing issue interest in the news. The Legal Bill Reviewer Blog, and Arizona Bar article, The Client’s Guide to Law Firm Overbilling, and other writings suggest that it is a topic of interest. 

Notably, the monitoring and auditing of billing in the 20th century was necessarily highly dependent upon human monitoring and interpretation. But, with artificial intelligence, optical character recognition, and sophisticated software, the individual time entries of an attorney might well be meticulously analyzed efficiently and inexpensively. They might be as quickly compared to another attorney. But, the “total claim cost” is perhaps even easier. 

The real distinction of the new paradigm described by Mr. Zachary is not likely the methodology or technology. The implication of artificial intelligence is intriguing. However, the critical thought of his message is the holistic analysis. Without the need to analyze the individual time entries, to evaluate the task-efficiency, to root out the double billing, Mr. Zachary contends that attorney billing will be measured holistically and perhaps even simply. 

Notably, his contention supports that the attorney billing can be measured and evaluated without significant further effort by the payer. The payer is already evaluating overall claims cost for the purpose of evaluating the medical care. It has implemented formulas to evaluate the medical providers, not on a micro level but macro. Simply put, what is the overall claims cost when this medical provider or facility is engaged?  To perform this, the total claims cost is measured. That data is in the payer’s hands, and the addition of the attorney’s name to the database allows the instant production of the same cost data report based instead on attorney instead of physician (primary, surgeon, rehabilitation, etc.) or facility. 

Mr. Zachary suggests that the payer simply run the same formulaic analysis of total cost when evaluating the defense lawyer involved. This methodology is a simple, quick, and objective measure. Whether it is a measure of attorney success might be debatable. Some cases settle for reasons unrelated to either the doctors or the attorneys. But, if applied in a large population of claims, any outlier situations would presumably be subsumed by the law of large numbers. That is, overall measure of performance would be based on a large-population average, which would ameliorate the effects of cases that involved significantly increased or decreased “total claim costs.”

The suggestion is fascinating. There will be questions of unintended consequences. Will attorneys be reluctant to recommend litigation of meritorious issues that is capitulation? Will there be perceived incentive to settle earlier, thus establishing the cost but perhaps not serving the injured worker who would instead benefit from care and treatment?

Thus, while the overall approach and the many details remain to be seen, it appears the writing is on the wall. The focus of the payer’s team (doctors, lawyers, etc.) will be focused upon the total claim costs. The computers will rank and rate lawyers and doctors, and payers will make decisions upon those conclusions. 

But, might the same be applied to other service providers? How about the mediator selected to negotiate the resolution? How about the judge or district to which a case is assigned? How about the claims adjuster striving to manage the entire situation? Is there any realistic limit to the manner in which such data could be applied? And, in that vein, the better question is perhaps “should be applied.” The fact is that injured workers are individuals. The managers and owners of the businesses where injuries happen are individuals. While there is perhaps attraction to the algorithm “total cost” paradigm, will it remove the humanity from the process? Isn’t the humanity of those involved of some value, some benefit?

I do not doubt for a minute Mr. Zachary’s contention that payers soon (or now even) can. Will there be discussion of whether they should?