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Alternative Dispute Resolution: What and Why?

It is no secret that it has become an industry trend for high profile construction projects to be awarded to  nonunion contractors due, in part, to rising costs associated with work-related injuries. As recently as ten projects that were union are now awarded to nonunion labor at disproportionate rates. That trend is nowhere more apparent than in New York City, where union construction work has eroded in favor of nonunion over the past fifteen years. However, it’s not all doom and gloom for labor. With the transition to a new administration also comes the promise of new infrastructure spending. The Biden administration’s infrastructure plan has passed the senate. Now, paired with a budget reconciliation, it is on track to pass the house by the end of September. The two bills contain billions of new spending to help rebuild and fortify the country’s infrastructure. Additionally, New York remains relatively successful when it comes to efforts to contain additional waves of COVID-19. That is why the stage is set for union labor to get back in the game, and the way back could be with alternative dispute resolution, or ADR.

ADR is an alternative system for administering union workers’ compensation claims for. While it is not necessarily limited to the construction industry, construction projects heavily utilize ADR since the claims in this sector tend to be most frequent and severe. The benefit of ADR is that workers’ compensation claims move away from the traditional and adversarial state workers’ compensation systems by creating an independent ecosystem for managing workers’ compensation claims. Workers’ compensation ADR programs, at a minimum, must provide benefits to injured workers that are set to state law standards. However, a well-conceived ADR program can pay big dividends for both employers and employees alike.

For employees, ADR includes a streamlined approach to both medical benefits and dispute resolution. Most importantly, ADR is a collectively bargained process that returns dignity to injured workers and focuses on swift and fair claims resolution. In a well-run ADR program, employees receive medical treatment immediately after accidents, with no delays. They are assigned personal care coordinators and case managers to ensure that their treatment is facilitated promptly and fairly. Treatment disputes are reduced because both unions and management agree upon doctors in the ADR program. In addition, benefits are paid promptly, at an equal to or greater level than state-mandated benefits.

Much of what was discussed above is, likewise, a benefit for employers. Streamlined treatment and the removal of barriers regarding treatment denials help to get injured works back on the job quicker and claims closed faster. The injured worker advocate, who will facilitate the resolution disputes with the carrier, eliminates the myriad delays associated with the litigation process that always extends the life and cost of a claim. A return-to-work program reduces the extraneous costs of hiring replacements for injured workers by bringing employees back, within their restrictions, to fill needed jobs. A cutting-edge safety program, signed off on by the union, makes any project more desirable for insurance carriers.

ADR provides an opportunity to implement cutting-edge and sophisticated site-specific safety programs along with enhanced medical and claim management. The goal of a good safety program is to prevent injuries from ever happening. Still, when they do occur, the ADR program gets injured workers treated for their injury and back to work quickly. Expeditiously returning employees to their full wages reduces the uncertainty surrounding payroll benefits that may have stopped due to long-term absences from work. It cannot be overstated: the importance of allowing workers to realize their full earning potential all while continuing to support their families once again, in the trade they have built their life around. Suppose there is a dispute regarding an employees’ claim. In that case, the ADR program comes with a built-in injured worker advocate who will contact the carrier and seek to resolve disputes within the conciliatory nature of the program.

Much of the discussion above is, likewise, a benefit for employers. Streamlining treatment and removing barriers regarding treatment denials help get injured workers back on the job quicker and claims closed faster. The injured worker advocate, who will facilitate resolving disputes with the carrier, eliminates the numerous litigation process delays that continuously extend claim life and cost.  A return-to-work program reduces the extraneous costs of hiring replacements for injured workers by bringing employees back, within their restrictions, to fill needed jobs. A union signing off on a cutting-edge safety program, makes any project more desirable for insurance carriers.

The bottom-line, most important, and easily realizable benefit of an ADR program on construction projects, is reducing insurance costs. This reduction allows union contractors to bid more competitively and leads to more available jobs for union workers. There is an oft-cited Cornell University study, which was published in 2001 and then updated in 2012, that boasts compelling statistics. New York, Minnesota and California’s data shows a substantial reduction in ultimate project loss costs within an ADR program when juxtaposed with a traditional workers’ compensation program. In some cases, 66%!

ADR is a boon to both union employees and contractors alike. It is a return to the original intent of what state workers’ compensation laws were conceived to be: a fair and equitable system that compensates employees when they are injured on the job. In addition to providing them with the medical care, they need to return to the status quo and get back to work quickly. Now is the time for both unions and contractors to push to implement ADR for workers’ compensation. The benefits waiting to be derived by all parties are too great to ignore.

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