Worker's Compensation Insurance Research Articles

Workers' Compensation: Benefits, Costs, and Safety under Alternative Insurance Arrangements

Thomason, Schmidle, and Burton make use of a unique data set to delve into how insurance arrangements affect several objectives of the workers' compensation (WC) program. They underscore the effects of deregulation and other changes in WC insurance pricing arrangements by performing empirical analyses that use state-specific cost, benefit, and injury data from 48 states for 1975-1995. This allows them to address the interactive relationships among the four objectives of WC systems adequacy of benefits, affordability of WC insurance, efficiency in the benefits delivery system, and prevention of workplace injuries and diseases and how various public policies adopted by states or the federal government work to achieve them.

Do High Claim-Denial Rates Discourage Claiming? Evidence from Workers Compensation Insurance

If individuals decide whether to file an insurance claim based in part on the expected value of the benefits they will receive, then changes in the probability that a claim will be denied by the insurer will influence the probability that a claim is filed. Increasing claim-denial rates to reduce claim rates and cut costs would be a questionable strategy for an insurance company that marketed policies to the individuals who will file claims. But in the workers compensation insurance market, insurers sell policies to employers, while it is workers who file claims that may be denied. This article examines evidence from a period in the state of Oregon during which workers whose employers were covered by different workers compensation carriers faced different claim-denial rates at the same point in time, and during which the state's largest carrier changed its claim-denial rate dramatically over time. Using this evidence, the author finds that higher denial rates were associated with lower rates of claim filing. F urthermore, this relationship was strong and significant for claims arising from back injuries but insignificant for claims arising from traumatic injuries. Possible reasons for this latter finding are explored. INTRODUCTION Insurance carriers do not accept all the claims made by those they insure. Some claims are denied, whether because the insurer believes that the insured party misunderstood the terms of the coverage, or because the insurer suspects exaggeration of losses or some other intentional fraud on the part of the insured. Standard economic reasoning suggests that in deciding whether to file a claim, the insured individual takes into account this possibility of denial, along with any costs in terms of time and trouble imposed on him or her by the screening process through which the insurer makes the denial decision. Thus, an increase in the probability that all or part of a claim will be denied, or in the delays and requirements imposed on the claimant while that decision is reached, lowers the number of claims filed, Of course, an insurance company competing in a private market would likely be wary of a strategy designed to reduce the number of claims filed by increasing denial rates and/or the rigorousness of claims- screening procedures, as such behavior would potentially lead to a loss of customers to other carriers. Designers and administrators of social insurance programs such as Unemployment Insurance or Social Security Disability Insurance are in a different position, as they do not need to solicit customers for their insurance in a competitive marketplace. When faced with rising costs or concerns with moral hazard on the part of potential recipients, they can raise denial rates by tightening eligibility requirements or enforcing eligibility requirements more stringently, subject only to political pressures from potential recipients and those who represent them. Such increases lower program costs directly by lowering the number of filed claims that are paid. But, as Parsons (1991) has pointed out, an increase in claim-denial rates also acts as a self-screening mechanism, discouraging some potential recipients from even attempting to file a claim. Parsons offers empirical evidence of the claim discouraging effect of rising denial rates in the Social Security Disability Insurance program, as do Helpern and Hausman (1986 ) and Gruber and Kubik (1997). Likewise, Blank and Card (1991) show that the proportion of eligible unemployed workers filing for Unemployment Insurance benefits is lower, other things equal, in states that disqualify a greater percentage of those who actually do file claims. This study looks at another social insurance program, workers compensation insurance, for evidence that claiming is discouraged by higher claim-denial rates. The author examines data on workers compensation claims from the state of Oregon, covering a period during which, because of changes in state law and policy changes by the state's largest workers compensation insurer, there was considerable variation in claim-denial rates experienced by claimants over time, and by different groups of claimants at the same point in time. …

Blood Money, New Money and the Moral Economy of Tort Law in Action

This manuscript reports the results of a qualitative study of personal injury lawyers in Connecticut. Building on the results of an earlier study of lawyers in Florida (Transforming Punishment Into Compensation: In the Shadow of Punitive Damages, 1998 WIS. L. REV. 211), the study describes and explores the implications of professional norms and practices that govern tort settlement behavior. In particular, the study explores the moral and practical barriers to collecting blood money (money from individual defendants, as opposed to liability insurance companies), as well as the moral and practical explanations for victims' apparent ability to partially trump the claims of subrogating workers compensation and health insurance carriers. The results pose a challenge to the conventional understanding that tort law in action is a simpler, more streamlined version of tort law on the books. In addition, the results suggest that compensation and retribution concerns figure far more prominently in tort law in action than the deterrence concerns emphasized in much of the theoretical and doctrinal literature.

Diagnoses and treatment recommendations on workers compensation medical certificates.

To review the diagnostic descriptions and treatment recommendations for back and neck pain on the new workers compensation medical certificates and compare these with evidence-based guidelines. Retrospective analysis of 251 medical certificates of workers with compensable neck and back pain held by a workers compensation insurer. Diagnoses given and treatments prescribed by the nominated treating doctors. The diagnoses most frequently used were "sprain/strain" and "pain/ache". Physiotherapy was the most frequently prescribed treatment, followed by rest and medication. Rest was prescribed for 68 (27%) workers, 87% of whom were classified as having an acute injury. Activity-based treatments were prescribed for 45 (18%) workers. Not all doctors used diagnostic terms consistent with recommended anatomical taxonomy. The drug therapy prescribed was consistent with current evidence-based treatment guidelines. However, the prescribing of rest, and the omission, in most cases, of explicit recommendations to resume normal activities, including work, are not consistent with current guidelines.

ErgoKnowMe – Computer-Based Analyses and Management of Knowledge in the Assessment of Working Environments

Our client and partner, a public accident-insurance company (equivalent to the Worker's Compensation Insurance in the U.S.), has shifted their focus towards the consultation in the designing and redesigning of workplaces. Therefore, after conducting a series of careful analyses, we ascertained that a computer-based system would greatly assist these experts with their analyzing and consulting projects. This viable system, called “ErgoKnowMe”, was successfully tested both in the laboratory and in the field.

Effective Reduction in Workplace Injuries Through Implementation of Integrated OH & S Management Systems

The long term sustained reduction in all injuries, including musculo-skeletal disorders, was assessed in this study through a series of intervention programs in large government and private employers. The study included two large government employers with 8,000 and 10,000 employees working out of 150 and 200 geographically spread workplaces respectively. It also included a network of public hospitals, and a series of 20 case studies involving private companies who participated in an OH & S management system auditing program. A financial incentive was provided by the workers compensation insurer to those companies who scored well in this audit. The studies found that a range of key imperatives were common amongst those workplaces where sustained reductions in reported injuries was achieved. Such imperatives provided a foundation for the identification and implementation of prevention initiatives to address MSD's. The ad hoc approach to introducing ergonomics workplace modifications, on a case by case basis was found to be less effective when compared to this approach as part of an integrated OH & S management system.

Carpal tunnel syndrome and workers' compensation among an occupational clinic population in New York State.

This study evaluated the experience in the New York State workers' compensation (WC) system of 135 patients with work-related carpal tunnel syndrome diagnosed at an academic occupational medicine clinic between 1991-1994. Worker's Compensation Board (WCB) records were reviewed to ascertain: (1) the proportion of WC claims that were not initially accepted (i.e., that were challenged) by the WC insurer, (2) the proportion of challenged claims ultimately decided in the claimant's favor, (3) the length of the period between case filing and claim adjudication, and (4) risk factors for claim challenge. Seventy-nine percent of the claims were not initially accepted by the WC insurer (challenged/no response). Of the 81 challenged/no response cases adjudicated (ruled on) at the time of the study, 96.3% were accepted as work-related. Mean time from claim initiation to adjudication was 429 days (range 58-1,617). Mean time from physician request for any treatment and WCB authorization was 226 days (range 0-1,296). Mean time from physician request for surgery authorization and WCB authorization was 318 days (range 7-595). Claims filed by non-whites, low-wage workers, and union members were significantly more likely than others to be challenged. Patients with work-related carpal tunnel syndrome face frequent claim challenge by WC insurers in NY State, with attendant prolonged delays in adjudication and treatment authorization. Likelihood of claim rejection was strongly related to ethnicity and socio-economic status.

Effective measures for reducing environmental insurance costs

Can pollution prevention (P2) management practices result in lower premiums paid for business insurance? In theory, P2 activities on the part of the insured can reduce the risk of pollution-related claims—but this depends on a competetive insurance market. What follows is an examination of two forms of business insurance—environmental insurance and worker's compensation insurance— and some cases where lower costs were realized.

Occupational Injury Rates Among Hired Farmworkers

A new method for determining occupational injury incidence rates among hiredfarmworkers is presented. The method relies exclusively on reports pertaining to allpaid claims by hired farmworkers under workers compensation insurance and issufficiently specific to determine incidence rates for persons employed in each of 14different types of agricultural commodities.<br><br>The Workers Compensation Insurance Rating Bureau of California (WCIRB)provided summaries of case reports including injury date, type of injury, body partaffected, nature of injury, weekly earnings of claimant, medical payments, indemnitypayments (if any), and the Risk Classification code in which the injury occurred, whichis a type of categorization of the commodity group in which the injury occurred. Inaddition, the WCIRB provided total wages paid by all employers in each riskclassification code as a surrogate for direct measurement of exposure. The number ofreported paid claims under workers compensation insurance by hired farmworkers inCalifornia for the period 1978-1994 totaled 673,316.<br><br>Aggregate wages and average weekly earnings for each risk classification code wereused to determine annual average employment (FTE). The total number of reportedpaid claims within each classification code was then utilized to compute the incidencerate for occupational injury in the respective category. From these data an overallincidence rate for California hired farmworkers is calculated.<br><br>The 1994 incidence rates for non-fatal occupational injuries and illnesses foundusing this method ranged from a high of 19,660 cases per 100,000 FTE for stock farmand feed yard workers to a low of 4,440 cases per 100,000 FTE for berry farmworkers.Overall, the incidence rate among all California hired farm workers in 1994 was foundto be 10,546 per 100,000 FTE. These results compare favorably to other recentdeterminations of incidence rates for injury among hired farmworkers.

Strategies for Construction Contractors to Reduce Workers' Compensation Costs

Workers’ compensation insurance (WCI) premiums for construction companies are higher than those for most other industries. WCI is increasingly affecting contractors’ ability to conduct business and has already made the costs of performing certain types of work in certain states prohibitively expensive. However, there are a number of strategies construction companies can employ to lower their WCI costs. These include the formation of industry groups, safety programs, and lobbying for legislative reform. Groups of like-minded employers pool risk and provide better credit worthiness to potential insurers. Insurers in return are able to reduce marketing costs as well as claims processing and safety costs. An effective safety program can also greatly reduce workplace injuries. Multidepartmental and multilevel teams with the support of top management can help establish, implement, and continuously improve safety programs. Along with voluntary measures that an employer can take, it is essential that employers encourage their legislators to cure the workers’ compensation system. In states where legislative reform has taken place, losses and premiums have declined significantly. The writers hope that this paper will encourage construction companies to better understand the control they have over their own WCI costs and the benefits of improving their own safety performance.

Workers' Comp. Premiums: Disparities in Penalties for Identical Losses

Workers' compensation insurance (WCI) is one of the largest controllable costs for construction contractors. A fixed portion of the WCI standard premium is determined by the individual contractor's company characteristics, including type of work performed, wage rates, and company size. The variable portion of the standard premium reflects the individual contractor's safety record or loss experience. The variable portion is really the sum of a number of surcharges or penalties, one for each actual loss the contractor experiences. This paper examines these penalties in detail. The paper shows that the magnitude of each penalty is based not just on the magnitude of the corresponding actual loss, but also on company characteristics. The result is that different contractors end up paying vastly different penalties for identical actual losses.

Clinical impact of contrast-enhanced MR imaging reports in patients with previous lumbar disk surgery.

We wanted to assess the clinical impact of the reports of contrast-enhanced MR imaging on the decision to repeat surgery and on the results of repeat surgery in patients with previous lumbar disk surgery. We interviewed 257 patients who had undergone lumbar disk surgery and who showed symptoms suggesting persistent or new disk herniation. We conducted our interviews 6-18 months after patients had undergone contrast-enhanced MR imaging. We then correlated patient outcome with original MR findings. Fifty-two patients underwent new surgical procedures after their MR examination. Findings of disk herniation on MR images were associated with a significantly greater frequency of repeat surgery. The size of main herniation seen on MR images was also a significant variable. Patients with Worker's Compensation Insurance files had significantly worse prognoses: Only two (8%) of 26 of these patients reported 50% improvement 1 year after repeat surgery. However, only 6 (23%) of 26 non-Worker's Compensation patients reported 50% improvement 1 year after surgery. Despite its documented high anatomic accuracy, the clinical usefulness of enhanced MR imaging for patients with previous lumbar disk surgery needs further evaluation. In our series, findings of disk herniations on enhanced MR examinations were associated with a greater frequency of repeat surgery, but such surgery relieved symptoms in few patients. The influence of enhanced MR imaging on the decision for repeat surgery and on the type of surgery may be misleading. Selection criteria for repeat surgery need to be reassessed using rigorous outcome research protocols.

Unemployment Insurance and the Duration of Workplace Accidents

The social cost of workplace accidents is large. In a typical year in the United States, from one-third to one-half as many working days are lost to work injuries as are lost to unemployment (see Krueger 1988). Recently, economists have paid more attention to the economic issues involved in occupational safety and health (OSH). In particular, they have investigated the different effects of government intervention in this area'. For example, it has been found that, in general, safety regulations and their enforcement had little impact on the incidence of workplace accidents. There also seems to be a consensus that an increase in the generosity of Workers' Compensation (WC) benefits is associated with an increase in both the frequency and the duration of WC claims for workplace accidents. In this connection, some researchers have raised a potentially important issue: the possibility of substitution between WC and Unemployment Insurance (UI). In most countries, WC is more generous than UI in terms of wage replacement, and there may therefore be an incentive for workers about to be laid off to try to benefit from WC instead of Ul2. Workers suffering from a workplace accident may also be tempted to take action in order to obtain a longer period of recovery compensated by WC. These two types of moral hazard are likely to be particularly important when injuries are hard-todiagnose (e.g., low-back injuries) and in industries where the level of unemployment is such that many workers may expect to be unemployed and to receive UI benefits after their recovery. The construction industry in Canada may be considered such an industry since climate constraints mean that many workers are unemployed during winter time. Fortin and Lanoie (1992) were the first authors to investigate these issues. In particular, from Quebec aggregate data at the industry level, they found

Factors influencing expansion and contraction decisions by Illinois agribusiness firms

A survey of Illinois agribusiness firms was used to identify factors that have a positive or negative influence on expansion or contraction decisions. The most positive factors for expansion, and the most negative for contraction, relate to perceived market conditions. State development incentives were found to be ineffective. The most negative factors toward expansion related to worker's compensation laws and insurance costs, as well as other factors more directly under the control of state laws. © 1995 John Wiley & Sons, Inc.

Experience Modification Rating for Workers' Compensation Insurance

Most employers regard workers’ compensation insurance (WCI) as an outrageously expensive, but necessary cost of doing business. One of the objectives of WCI, to provide incentives for employers to improve safety performance, has been lost in the complex method used to calculate WCI premiums. Few employers and few insurance agents understand the process. This paper explains how WCI Standard Premiums are calculated using manual rates, payroll, and an experience modification rating. Manual rates help predict loss rates for different work classifications, payroll gives an indication of risk exposure, and an experience modification rating compares an individual employer’s actual loss experience to its expected record. This paper shows that employers with WCI are really self-insuring for most losses and ultimately pay for their own injuries. The paper shows how several small losses cost far more than one severe loss, how employers who try to save money by reporting incorrect work classifications may end up paying more, and why using the experience modification rating to compare the safety performance of different employers is not valid. Employers who understand how their WCI premiums are calculated will have far more incentive to improve safety, and will be better prepared to negotiate savings when purchasing WCI.

Static Lower Back Stress Analysis in Citrus Harvesting

The dramatic increase in worker injuries and Workers Compensation insurance costs have created a need to reduce worker mechanical stress in harvesting citrus. This analysis implemented occupational biomechanics to evaluate lower back stress in the current citrus harvesting operation. The object of this investigation was to identify activities which induce excessive lower back stresses on citrus workers. Lower back stress was evaluated under static conditions in three commonly occurring citrus harvesting positions and compared with National Institute for Occupational Safety and Health established limits on lower back stress. Three commonly occurring positions were analyzeddescending the citrus ladder, walking with a full citrus bag, and bending over to pick citrus from the ground. Sensitivity analysis was performed to determine if the citrus bag weight, abdominal pressure, height, weight, and physical size of the worker affects lower back stress. Some of these activities cause lower back force to exceed established industrial limits. Current citrus harvesting systems could be redesigned to reduce physical stress encountered by citrus pickers.

Decompressive lumbar laminectomy for spinal stenosis

A total of 258 consecutive decompressive lumbar laminectomies performed on 244 individuals presenting with spinal stenosis were analyzed retrospectively. Spinal fusion was avoided in all but two patients. Outcome in terms of pain relief and return to normal activity was evaluated in two stages, one derived from patient charts and having a relatively short-term follow-up time (mean 8.4 months) and a second derived from patient responses to a questionnaire (which also scored for satisfaction with the results of surgery), which had a longer follow-up time (mean 4.7 years). More than 20 clinical and operative parameters were analyzed. Overall, a high degree of success (93% pain relief, 95% return to normal activity) was achieved in the short term, which was supported by the longer-term follow-up data (64% pain relief, 56% activity return, 75% satisfaction). The following factors were not significantly correlated with outcome: patient age; sex; worker's compensation or no-fault insurance status; employed versus not employed; a history of back surgery prior to the laminectomy studied; existence of degenerative spondylolisthesis or scoliosis; complete versus incomplete myelographic block; or the level of the lumbar spine undergoing surgery. The major conclusions arising from these data are: 1) for all age groups through at least the eighth decade of life, decompressive lumbar laminectomy is a relatively safe operation having a high medium-to-long-term success rate; 2) lumbar instability following laminectomy is rare, even in individuals presenting prior to surgery with degenerative instability conditions; and 3) lumbar fusion in addition to the decompressive laminectomy procedure is rarely required for degenerative spinal stenosis.

Long-term follow-up after thoracic outlet decompression: An analysis of factors determining outcome

We reviewed our 12-year experience with transaxillary first rib resection in 136 patients screened by neurologists and thought to have neurologic thoracic outlet syndrome to determine what factors affected outcome. These patients represented 85% of the operative experience in a referral area of 1.2 million people. Patients were recalled every 2 years for surveillance. The mean follow-up was 60 +/- 7 months. There were no brachial plexus or vascular injuries. Secondary operations in the neck were required in 20 patients. The quality of the operative result was determined by whether the patient was able to return to preillness activities and whether the patient would undergo operation again if the same result would be obtained. The most important determinant of result was a history of trauma precipitating the neurologic symptoms, particularly in women. Only 25 of the 53 patients (47%) with a history of trauma returned to preillness activities compared to 65 of the 83 patients (78%) without such a history. Overall patient satisfaction was not affected by trauma. Thirty-eight of the 53 patients with trauma (72%) and 69 of the 83 patients (83%) without trauma were satisfied. When the men and women were analyzed separately men were found to have better results after trauma than did women. Other factors with a negative impact on operative results were the need to return to an activity that required repetitive arm movements, coverage under a worker's compensation insurance policy, and fixed joint abnormalities or neurologic findings in the upper extremity. The presence of an anatomic abnormality had no effect on operative results.(ABSTRACT TRUNCATED AT 250 WORDS)

Gamma Duration Models with Heterogeneity

In the authors' analysis of nonwork spells for Workers Compensation Insurance, they use the family of generalized gamma distributions for the structural model of failure time and both nonparametric and parametric controls for heterogeneity. These specifications allow for nested likelihood tests of not only the correct form for parametric heterogeneity, but for the structural distributions as well. The authors find in their data that while heterogeneity is important, both parametric and nonparametric types of control do about equally well. The best (in terms of statistical fit) structural distribution is the generalized gamma function; the exponential distribution fits especially poorly. Copyright 1991 by MIT Press.

Worker's compensation insurance for the oral surgeon

Worker's compensation insurance for the oral surgeon