WCRI Study Says Ga. Has Low WC Costs Per Claim, But High PPD Benefits and Settlements

July 11, 2003

Workers’ compensation costs per claim in Georgia were low relative to costs in the other states analyzed in a national study by the Workers Compensation Research Institute (WCRI), although indemnity costs per claim were higher, driven by permanent partial disability and lump-sum payments.

The study found that at an average of $2,353 per workers’ compensation claim, costs per claim in Georgia were among the lowest in a 12-state study conducted by the Cambridge, Mass.-based WCRI.

WCRI said the main reason for the lower than average costs per claim in Georgia was a very low percentage of claims for worker injuries involving more than seven days of lost time from the workplace – 14 percent in Georgia versus the 12-state median of 20 percent.

The study, CompScope(TM) Benchmarks: Multistate Comparisons, 1994-2000, provides a comparison of the workers’ compensation systems in 12 large states based on key performance measures such as benefit payments and costs per claim, timeliness of payments, and defense attorney involvement by analyzing a similar group of claims and adjusting for interstate differences in injury mix, industry mix, and wage levels.

The other states included in the study were California, Connecticut, Florida, Illinois, Indiana, Massachusetts, North Carolina, Pennsylvania, Tennessee, Texas and Wisconsin.

The study pointed out that for similar claims with more than seven days of lost time, Georgia medical and indemnity payments (wage replacement payments for lost-time injuries) per claim were higher than in many study states, especially for the more mature claims.

These higher costs per claim with more than seven days of lost time were driven by the high frequency and costs for claims involving the more serious injuries – called permanent partial disabilities (PPD) – and claims involving lump-sum settlements, according to the study. Lump-sum settlements are agreements that typically close out a workers’ compensation claim and result in a single payment to the worker.

The average cost per PPD claim in Georgia was $36,765 – the second highest among comparable study states (for 1997 claims evaluated in mid-2000). The study noted that 24 percent of claims with more than seven days of lost time in Georgia had lump-sum settlements (compared with the 12-state median of 20 percent), with an average settlement of $16,191 per claim – 19 percent higher than the 12-state median ($13,633).

“The higher costs per claim for claims with more than seven days of lost time are a concern,” observed Dr. Richard Victor, executive director of WCRI. “Policy makers should look at the factors behind the higher frequency and costs of PPD/lump-sum settlement claims.”

The study reported that the Georgia workers’ compensation system had among the highest rate of defense attorney involvement.

The average defense attorney payment per claim in Georgia for claims with more than seven days of lost time was $2,060, more than three times the average in Connecticut, the state with the lowest defense attorney payments ($645) for 1999 claims as of mid-2000.

Defense attorneys also were used more often in Georgia than in most study states. More than 28 percent of 1997 claims evaluated in mid-2000 involved defense attorneys, compared with 22 percent in the 12-state median.

The rate of first payment to injured workers at 21 days after the injury was lower in Georgia than in most other study states.

About 40 percent of injured workers in Georgia received their first check within 21 days of injury, compared with 45 percent for the median of the 12 states. By contrast, 58 percent of workers in Massachusetts and Wisconsin received their first check within 21 days of injury.

The low rate in Georgia is reportedly driven by a longer time to first payment once claims payors receive notice of injury, the study said.

The study also reported that benefit payments for all paid claims in Georgia grew 4 percent per year between 1997 and 1999 for claims evaluated at 12 months’ experience, following decreasing benefit payments per claim or little change in earlier years of the study period. Incurred benefit payments per claim showed stronger growth – 12 percent from 1998 to 1999, as of mid-2000.

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