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Artificial intelligence is rapidly reshaping many industries, and California’s workers’ compensation system is no exception. While AI tools promise faster processing and fewer administrative delays, they also introduce new risks for injured workers.
Insurance companies increasingly use automated systems to flag claims, evaluate medical requests, and identify what they consider “inconsistencies.” In practice, these systems can lead to unjust denials, inaccurate evaluations, and delays in treatment when workers need help the most.
Understanding how AI is being used behind the scenes can help injured workers recognize the challenges and protect their rights.
How Insurance Companies Use AI to Flag Claims
One of the most significant changes in workers’ compensation insurance is the use of AI-driven claim analysis. Insurers now rely on software that scans claim information, looking for patterns that may indicate fraud, exaggeration, or inconsistencies. These systems may compare the claim to thousands of past cases, industry injury data, or medical billing histories.
This can create problems for workers because AI tools often fail to consider:
- Unique circumstances surrounding an injury.
- Nuances in medical diagnoses.
- Delayed onset symptoms that are common in specific injuries.
- Differences in physical job requirements.
Because the system is designed to flag anything that appears “outside the norm,” legitimate claims can be incorrectly categorized as suspicious. That can trigger investigations, requests for additional documents, or delays in benefits while the insurer conducts a deeper review.
AI and Algorithm-Based Medical Approvals
Medical treatment is one of the most significant areas where AI is now influencing decision-making. Many insurers use automated systems to evaluate requests from treating physicians, especially those involving imaging, specialist care, surgery, or long-term treatment plans. These systems examine the request against pre-programmed guidelines and medical databases, often making decisions without any human review.
This creates several challenges for injured workers:
- Requests may be denied automatically based on rigid criteria.
- Important medical context may be overlooked.
- Conditions that do not fit predictable patterns may be misinterpreted.
- Treatment plans may be delayed while the system requests additional justification.
What makes these systems especially concerning is the lack of transparency. Injured workers and even treating doctors often do not know why a request was denied or which factors the algorithm relied on. This forces workers into time-consuming appeal processes while their injuries go untreated.
How AI Contributes to Algorithmic Denials
AI systems are also being used to shorten claim review times and cut costs. While faster processing may sound beneficial, the result is often an increase in denials.
The system may recommend rejecting a claim based on:
- Medical codes that do not align perfectly with the diagnosis.
- A perceived delay in reporting the injury.
- Work restrictions that differ from typical cases.
- Billing patterns that do not match other patients with similar injuries.
These denials may appear official and well-supported, but they may be based on incomplete or inaccurate data. When algorithms drive decisions, injured workers face an uphill battle proving their claims are legitimate, even when the injury is documented and verified by medical professionals.
How Automated Decision-Making Affects Workers’ Lives
For many injured workers, the most harmful consequence of AI-driven decision-making is delay. When a claim is flagged or a medical request is denied, treatment often stops. Workers may lose access to physical therapy, diagnostic testing, and specialists while waiting for approval. This can lead to worsening injuries, longer recovery times, and additional stress at a time when financial and medical stability are already uncertain.
For workers who depend on temporary disability checks, delays in claim approval can create immediate financial hardship. AI-driven errors can push workers into debt, force unnecessary return-to-work pressures, or increase the risk of job loss.
How Our Attorneys Help When AI Affects Your Claim
When automated systems interfere with a valid claim, legal representation becomes critical.
At Hanning & Sacchetto, LLP, our Whittier workers’ compensation attorneys can:
- Request insurers to provide human review of AI-based decisions.
- Challenge unfair denials and demand explanations for algorithm-driven rejections.
- Help doctors submit stronger medical records that meet automated systems’ requirements.
- Ensure compliance with California workers’ compensation laws that insurers must still follow.
- Appeal treatment denials through utilization review and independent medical review.
AI may be a powerful tool for insurance companies, but it is not perfect. Many denials issued by automated systems can be overturned when challenged by an attorney who understands the process.
How Hanning & Sacchetto Protects Injured Workers in an AI-Driven System
At Hanning & Sacchetto, LLP, we understand how quickly the workers’ compensation landscape is changing. Our Los Angeles County attorneys stay informed about new technologies and how insurers use automated tools to reduce payouts. We challenge unfair denials, demand proper review, and fight for timely medical treatment so that injured workers can focus on recovery instead of battling algorithms.
If your claim or medical request was denied or delayed, Call (562) 698-6446 or contact us online today for a free consultation. We can help you navigate the increasingly complex system and protect your right to full workers’ compensation benefits.