Hawaii Workers’ Compensation Claims Often Involve Lost Time

The Workers’ Compensation Research Institute recently studied Hawaii’s workers’ comp system and found a strikingly high proportion of claims that involved lost time. However, the insititute also identified several strengths of the Hawaii system, including prompt initial payment of indemnity benefits, relatively swift resolution of disputes through a “user-friendly” hearing process, and temporary disability insurance and prepaid health care programs that provide a “safety net” for workers whose claims are initially denied.

When WCRI studied the Hawaiian system in mid 2005, system participants were divided about the performance of the system. Some business representatives identified the high cost of workers’ compensation premiums, fraud, mental stress claims and hearing delays as problem areas. Most insurers and defense attorneys felt the system worked well as a whole, but noted concerns about the statutory presumption that put the onus of proving the injury was not work-related on the employer, the use of vocational rehabilitation, the inclusion of chiropractors and naturopaths as treating physicians, the lack of limits on palliative care, fraud, and the lack of regulation of inpatient hospital charges.

Worker representatives voiced general satisfaction with the current system. However, they expressed some concern about several important issues. First, they were opposed to rule changes promulgated by the Department of Labor and Industrial Relations to adopt evidence-based treatment guidelines, concerned that these guidelines might restrict medical care to injured workers. Other issues mentioned were dispute resolution delays, delays in medical treatment, a lack of information about vocational rehabilitation benefits, improper termination of benefits, regulation of workers’ attorneys’ fees but not fees for defense attorneys, and insufficient information about the performance of the Hawaii system.

Other key findings included:
*Hawaii had a strikingly high proportion of claims with indemnity payments. Incurred benefit data showed that among the 19 states with a three-day waiting period, Hawaii had the highest proportion of incurred indemnity claims per 100,000 workers — 46 percent compared to the 19-state median of 29 percent (policy year 2000, the most recent data available).The total number of incurred claims (indemnity and medical only) was 23 percent lower than in the median state (5,324 claims compared with 6,917 claims). However, with 2,469 indemnity claims per 100,000 workers, Hawaii had the second highest frequency among the 19 states, 46 percent higher than the median of 1,687 claims.

*The time to first payment in Hawaii was noticeably faster than 39 other jurisdictions. The median interval from the date of injury to the first indemnity benefit payment in Hawaii was 18 days, compared with 30 days for the median of 40 jurisdictions. The average interval from the date of injury to the date of the first benefit payment in Hawaii was 41 days, the fastest among the 40 jurisdictions.

*Two features combine to produce a “user-friendly” hearing process in Hawaii. First, the process is issue specific and requires no special preparation other than the exchange of reports. Second, hearings are informal, held by hearing officers, who are usually not attorneys. In roughly one-half of the hearings, a claims adjuster represents the insurer or self-insurer; in roughly 45 percent of initial hearings, the worker chooses to be unrepresented or is assisted by a union representative.

*Overall, the dispute resolution process is relatively fast. In 2004, the state-wide average interval from the request for a hearing to a hearing and decision was 162 days (5.3 months). This interval was shorter than in seven of nine other states WCRI has studied in the past ten years for which comparable data were available.

*Despite Hawaii’s relatively speedy dispute resolution, there is room for improvement, especially among cases involving initial denial of compensability. In these cases, the interval between the request for a hearing and a hearting decision increases by almost two months. Some hearing officers attribute the increase to the more complicated nature of these cases, the added preparation time needed, postponements of scheduled hearings and complicated hearing decisions.

*Two state-mandated programs may provide a “safety net” for injured workers: non-occupational temporary disability insurance (TDI) and prepaid health care (PHC) insurance programs. While the compensability of a claim is being determined, a worker can file for non-occupational TDI and is entitled to 58 percent of her/his average weekly wage for up to 26 weeks if the claim is accepted by the carrier. Under the PHC program, employers must provide health care benefits to eligible employees. These two programs help mitigate the impact on workers of delays in receiving workers’ compensation benefits while compensability is in dispute.

Source: Workers’ Compensation Research Institute