Big Data, Big Confusion Part II: Hearing Run-Off Factor v. Win Percentage – The Real Measure of Wasted Time and Resources

In the previous post  we discussed the Disputed Claims Percentage (DCP) as a key metric and its relevance in gauging your organization’s UI program. This week we’ll take a look at the always-dreaded, over utilized, and deceiving appeal process. 

Viewpoints on hearings run the gamut from “Why even bother, we never win so we don’t go!” to “We appeal everything, even if we know it’s not a great case.”  Employers are always weighing whether attending the hearing will be sufficiently beneficial to offset the time and resource drain of taking witnesses out of the workplace to attend and the degree of difficulty or inconvenience experienced.  This naturally lends itself to projecting outcomes; making you the Unemployment Odds-Maker, without the Vegas glamour or glitz.  Often the decision making process is compressed, and matched with higher claim volumes, the employer can become quickly inundated.   Tunnel vision takes hold:  How can this be happening? These managers are going to hate me!  This is the third hearing this month! Will they let me postpone it? How did we get here?

Take a deep breath.  Sometimes retracing your steps is best way to figure things out (and find your car keys). How and why did this hearing come to be?  If it’s the result of an employer appeal, you should look a bit closer. Was the claimant approved at the first determination level?  If you are adamant about not paying the claim, it is likely that your organization believes they have a solid set of facts that must come out “in the wash” and be successful at the hearing level.  Why then, hadn’t those facts already been presented?  The employer’s single best (and most under-utilized) method of obtaining savings and controlling the payment of unwarranted claims is at the initial level. By using the appeal process as a fail-safe or a stopgap measure you are effectively creating more organizational drain in terms of time and resources, while prolonging the life cycle and cost of the claim.

Your unemployment Hearing Run-Off (HRO) factor is a useful statistic that can give you a realistic idea of how effectively you are managing your UI program.  It measures the rate at which claims proceed to the appeal level after being protested (or disputed).  A higher HRO means your organization is appealing more claims after-the-fact, while simultaneously wasting time and resources. A lower HRO means that claims are being effectively handled at the initial determination level (first agency ruling).  Typically, an HRO of 10% or less is an appropriate benchmark.  To calculate your HRO, simply take the number of hearings you have attended in a period and divide it by the total number of claims you have protested.  A low HRO percentage coupled with a high DCP percentage, means you are putting yourself in the best position to protect your account from unnecessary charging, preserve funds in your account (or direct payments made) while reducing the need to attend a costly and time consuming hearing.

Many of our competitors, who have been unable to produce respectable Key Metrics, prefer to have their clients focus on the “hearing win percentage”.  It can even become a source of great pride for both the employer-client and vendor alike.  A 90% hearing win percentage is an impressive looking number and an easy sound-bite to toss around, but it doesn’t usually tell a good story.  In fact, it’s a prime indicator that your vendor is out of touch and utilizes an obsolete service model.  Just a little bit of a razzle-dazzle going on here…

Let’s look more closely and clear away some of the fluff:  If you are appealing 40% or even 20% of all the claims you protested to win 90% of the hearings you attend, are you still impressed? Do you or your managers, supervisors and other witnesses appreciate that 90% success rate when they are participating in a hearing that didn’t have to be scheduled in the first place? Does a 90% win rate lose its shine when hours of production time is wasted and lost opportunity costs rise?  Probably not.  Hearing Win Percentage is a consolation prize to those who have already lost their first and best opportunity to really save.  The BEST way to win, is to ensure the facts and information necessary to obtain a disqualification are submitted to the state at the most time and cost efficient level in the process – the first level!  The majority of rulings issued on invalid claims are not appealed, locking administrative and overpayment costs down at the first agency ruling.  The hearing process should be reserved for complex or contentious cases requiring a much more thorough review of the facts, previously not available or accessible at the first level.  With the new state laws mandating “timely, complete and accurate” separation information at the claim response level and penalties involved, the actual cost of that impressive Win Percentage just jumped much higher!

Now that you have both the DCP and HRO statistics in hand, take a fresh look at what your data is actually telling you. These simple measures can provide significant insight, and help an employer pinpoint areas in need of improvement.  If your program is working well, these numbers will provide validation and will be invaluable in tracking your future success!