CAMBRIDGE, Mass.–(BUSINESS WIRE)–Payments per claim for lost wages, known as indemnity benefits, with more than seven days of lost time and 36 months of experience in Pennsylvania were among the highest of 16 states analyzed in a study by the Cambridge, Mass.-based Workers Compensation Research Institute (WCRI).
The WCRI study, CompScope™ Benchmarks for Pennsylvania, 11th Edition, found that the average indemnity payment per claim cost $20,255 in Pennsylvania, compared to $14,426 in the median study state. The higher indemnity benefits per claim in part reflect some characteristics of the Pennsylvania wage-loss benefit system.
In a wage-loss system, at the end of the healing period, a worker who has not returned to work or returned at less than the preinjury wage typically continues to receive temporary disability benefits. In addition, permanent partial disability (PPD) benefits are paid only for scheduled injuries. As a result, duration of temporary disability is expected to be longer than in non-wage loss states.
When compared with the other three wage-loss states in the study, injured workers in Pennsylvania received temporary disability benefits for an average of 26 weeks for injuries occurring in 2006 and evaluated in 2009 – longer than in Michigan (18 weeks) and Massachusetts (24 weeks), but shorter than in Louisiana (32 weeks).
The study observed that in a state where scheduled PPD benefits only cover total loss or total loss of use, it is not surprising that only 16 percent of workers in Pennsylvania received lump-sum settlements in 2006/2009.
The average lump-sum settlement per claim was $53,761 in Pennsylvania, higher than in other wage-loss states in the study.
Despite large lump sums in Pennsylvania, PPD benefits and/or lump sums encompassed 42 percent of paid indemnity benefits in Pennsylvania in 2006/2009. This was lower than in Michigan (51 percent), similar to Louisiana (40 percent), and higher than in Massachusetts (35 percent).
In the period from 2003/2006 to 2006/2009, lump-sum payments per claim with lump-sum settlements grew 11 percent in Pennsylvania. This increase was similar to the growth rates in Michigan (12 percent), but slower than in Massachusetts (14 percent) and Louisiana (27 percent).
The study also reported that over the study period 2003/2004 to 2008/2009, medical costs per claim with more than seven days lost time grew by 48 percent, slightly faster than in other study states. In 2008/2009, medical costs per claim in Pennsylvania grew by 8 percent, similar to the typical study state.
Despite the faster growth in medical payments per claim, Pennsylvania had fairly typical medical costs per claim of the study states in 2006/2009.
WCRI also reported that compared to other study states, Pennsylvania had higher litigation-related expenses as a percentage of total claim costs for claims with more than seven days of lost time in 2006/2009. Litigation expenses accounted for 4.6 percent of total claim costs, while in many study states litigation-related expenses accounted for between 3 and 4 percent of total claim costs.
The time to first indemnity payment within 21 days of injury improved slightly in Pennsylvania since 2005, driven by faster injury reporting.
The Workers Compensation Research Institute is a nonpartisan, not-for-profit membership organization conducting public policy research on workers’ compensation, healthcare and disability issues. Its members include employers, insurers, insurance regulators and state administrative agencies in the U.S., Canada, Australia and New Zealand as well as several state labor organizations.
To order this report, visit the WCRI web site: www.wcrinet.org.