This is typically a normal newborn problem, so we don't see a lot of them. Gillette has brachial plexus clinic with a nice webpage for providers and parents.
From Peds Ortho:
This is something that I recommend treating in OT/PT early on. Even if improvement is ongoing. I would also recommend a consult with a pediatric hand and upper extremity surgeon. Loree Kallianinen, Ann Van Heest, and Deb Bohn are the people I consult. One bit of encouragement. If improvement is observed at this time after presentation, the prognosis is typically good. Best wishes for a full recovery.
From Children's Physical Therapy:
We see infants with this diagnosis and generally, if a course of therapy fails to make progress, then a patient would be referred for surgical intervention. A surgical option is often not looked at until a year or so, giving the nerve time to regenerate and see how the infant responds to therapy. We could certainly see this patient for therapy. Our PTs typically like to see the infant as soon as the diagnosis is made to discuss positioning and range of motion with the parent.
Boston has some good info on this on their website: http://www.childrenshospital.org/clinicalservices/Site1165/mainpageS1165P0.html
They seem to recommend referral to therapy if unresolved at 6 weeks.
Hope this helps!