Tennessee moved from the low end to the very low end of total workers’ compensation claim costs after passage of reform legislation in 2013 that trimmed permanent partial disability benefits and slashed the number of attorneys in the system.
Costs in Florida grew moderately since 2013 for claims with more than seven days lost time, but indemnity costs ticked up after the state Supreme Court issued two rulings that threw out attorney fee caps and a duration limit on temporary disability benefits.
And in Texas, a perennially stable low-cost state, comp cuts ticked up from 2013 to 2015 but ticked down again from 2015 to 2018, mostly due to savings in medical expenses.
Those are among the highlights in the Workers’ Compensation Research Institute’s 19th annual CompScope Benchmarks report, released Tuesday. The report — which actually consists of 16 separate reports — compares key data points such as costs, claims duration and attorney involvement in 18 states over time. The study is often used by state lawmakers to make tweaks to work comp systems.
Both Tennessee and Texas passed significant legislation during the study period, while Florida’s system was shaken by constitutional challenges that threw out key provisions of reforms passed in 2003.
In Tennessee, Senate Bill 200 took effect in 2014, changing the way permanent partial disability benefits are calculated. The bill reduced PPD costs by 20% the next year, according to the CompScope report.
The legislation also cut the use of claimants’ attorneys by about a third. The report says attorneys were involved in 31% of Tennessee claims from 2011 to 2014, but only 20% from 2015 to 2018. No other state among the 18 studied had a decrease even close to that.
The impact on defense attorney involvement was minimal. According to the report, a defense attorney was involved in 51% of claims with more than 7 days of lost time from 2015 to 2018, down from 56% from 2012 to 2015. The report notes that Tennessee law requires all incorporated companies to have legal representation in disputes.
Meanwhile in Florida, claimants’ attorneys were having a field day. The Supreme Court’s Castellanos decision in April 2016 held that a statute that capped claimants’ attorney’s fees to a fixed percentage of benefits no matter the amount of time spent on the case violated claimants’ right to due process. Then in June 2016, the Supreme Court in Westphal struck a statute that limited the duration of temporary total disability benefits to 104 weeks regardless of whether the claimant had recovered or was medically stationary.
Without making a definite assertion, the CompScope report says those court decisions that recent growth in indemnity benefits “may be, in part, related to the early effect” of those court decisions.Indemnity claims with 12 months of maturity increased 9% from 2015 to 2016 and 6% from 2016 to 2017, after increasing an average of 4% a year from 2013 to 2015.
The CompScope report found that attorney involvement ticked up 1% in the year after the Supreme Court rulings. And Florida was already an attorney-heavy state: From 2015 to 2018, claimant’s attorneys were involved in 38% of claims, a higher rate than every state in the study except Georgia, North Carolina, California, New Jersey and Illinois.
The report found that changes to Florida’s medical fee schedule adopted July 2016 were also increasing costs. Prices paid for non-hospital professional services increased 7% from 2015 to 2017 after adoption of an updated fee schedule. Total medical payments per claim grew moderately at 4% annually in 2016/2017, according to the report.
Overall, Florida’s total costs per claim were typical of the study states for 2015 claims, with three years duration. But indemnity benefits were 11% lower than the 18-state median. The study also found that the recent growth in costs, although moderate, was faster in Florida than most of the study states.
In Texas, constant legislative tinkering has kept the workers’ comp systems on an even keel, the report shows. Reforms in 2005 required preauthorization for physical and occupational therapy. Legislation in 2006 created health care networks and tied benefit levels to the state average weekly wage. In 2007, lawmakers mandated treatment guidelines and utilization review. In 2011, a drug formulary was implemented and in 2013 the formulary became mandatory for claimants who were already in the system before its adoption.
Those changes held down Texas costs when compared to other states studied. Total costs per claim with seven days lost time in Texas increased at an annual average rate of 2% from 2002 to to 2015 and dropped to a 3% annual average from 2015 to 2017. The median for the 18 study states was a 4% average annual increase from 2005 to 2015 and a 2% average annual increase from 2015 to 2017.
Texas had fewer claimants’ attorneys working in its workers’ compensation system than any state studied from 2015 to 2018: The worker was represented in only 12% of claims. That compares to 52% for Illinois and 51% for New Jersey.
And only North Carolina and Tennessee had lower total costs per claim with seven days lost time than Texas, among the 18 study states.
The studies are available for purchase from the WCRI website.
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