Order in the Court: Can Alternative Dispute Resolution Foster Better Outcomes?

A workers’ compensation claim from a New York construction site sat on a judge’s calendar for nearly a year before anyone thought to move it forward or even realized it had stalled. By the time the oversight was detected, both parties had lost valuable time, paid unnecessary legal fees and found themselves with fewer options for resolution.

This kind of mistake highlights how traditional litigation can prolong workers’ comp cases and increase costs, and points to the benefits of another path — alternative dispute resolution. ADR encourages dispute resolution outside the traditional court process, enabling those involved to resolve claims faster — and often with significantly reduced litigation costs.

As states like New York lean into ADR programs, understanding when ADR applies and how to navigate the process effectively is becoming increasingly important for claims professionals, employers and counsel alike.

Why The ADR Landscape Is Expanding

New York’s statutory alternative dispute resolution program dates back to a 1995 amendment to the state’s workers’ comp law, which defined it as a means of resolving claims outside of the traditional Worker’s Compensation Board process. In practice, ADR is typically built into project labor agreements between a union and a project owner. When a dispute arises, a mediator may help the two parties resolve it or an arbitrator may decide the outcome instead of a workers’ compensation law judge.

In 2019, New York made mediation before standard litigation mandatory across civil, family and commercial cases. Now, workers’ comp cases for construction projects are following the same path.

Employers and carriers operating in high-volume, high-risk construction environments are searching for faster, less expensive paths to resolution than litigation.

Consider a claimant whose doctor recommends surgery. Under the traditional path, authorization for the procedure may take months. Under ADR, the same request can be authorized in just days or weeks, allowing the claimant to receive medical treatment and return to work sooner, without months lost to procedural back-and-forth.

Here at Jones Jones, we have seen completed ADR projects come in at roughly 50% below what carriers projected under the traditional workers’ comp process.
Many of the state’s largest construction projects, such as New Terminal One at JFK airport, have already moved their workers’ comp claims into ADR programs. As sophisticated owners and general contractors seek any hedge against the rising cost of construction-related injuries, the adoption is now starting to trickle down to smaller projects.

While New York’s ADR status currently applies explicitly to unionized construction workplaces, other states have begun extending workers’ comp ADR to non-construction workplaces, often unionized. For example, California expanded its law to allow non-construction ADR under Labor Code Section 3201.7, while Massachusetts and Florida allow workers’ comp ADR carve-outs for construction and other unionized sectors.

How ADR Fits into Claims Strategy And Resolution

ADR isn’t just about speed; it’s about flexibility and enabling outcomes to be structured in ways that are not often found in the traditional court system. Under ADR, a claim, or a single issue within it, can be resolved at any point in its lifecycle. This can allow parties to move forward more quickly and easily, without waiting for a hearing or a workers’ comp judge to weigh in on a substantive issue.

However, this flexibility works best in cases where all parties recognize a case as a potential ADR candidate; otherwise, the results can undercut the core benefits of the program. This can often be traced to disputes with parties and firms that don’t have strong expertise in ADR.

Some of the most common mistakes made by those unfamiliar with ADR are tactical, such as using the wrong forms in an ADR matter. However, other issues may run deeper. It’s not uncommon for some parties, who may be unfamiliar with the process, to approach ADR with a traditional workers’ comp mindset, leading them to scrutinize the timing of notices or to look for holes in the other side’s position.

ADR is built on a more transparent, collaborative approach that runs through an ombudsperson rather than opposing counsel. When carriers or counsel enter ADR with a litigation mindset, they deter the flexible and less costly outcomes ADR is designed to produce.

What Should Carriers Look for in ADR Counsel?

Firms with deep experience in the workers’ comp space are continually refining their settlement strategies as the underlying claims environment evolves. ADR is only the latest version of that, not necessarily a new specialty attached to an otherwise traditional defense practice.

There are several best practices carriers and businesses should consider when evaluating ADR counsel. In construction, they should consider counsel who:

• Has a thorough understanding of the jobsites and employers that are candidates for ADR programs.
• Understands how all the parties work together on a construction site.
• Can make the call on when a case should go to ADR and be able to explain their reasoning and the ADR process clearly to others.

Where ADR Is Headed

As construction-related workers’ comp costs continue to climb, more owners and carriers will look for alternatives to the traditional litigation track, with ADR as the clearest option.

While New York currently limits ADR to construction, other states have already extended ADR into non-construction, often unionized workplaces. More data emerging from the state’s own programs may soon inspire others to follow the trend.

ADR fosters a different mindset built on transparency and collaboration, rather than taking adversarial positions at every turn. Carriers that turn to counsel who understand the ins and outs of ADR have the opportunity to not only resolve claims faster but also attain better outcomes for everyone involved.

Thomas is managing partner at Jones Jones LLC, where she leads the firm through the evolving technicalities of workers’ compensation and insurance defense law.