Rousmaniere: Speaking for the Injured Worker

The workers’ comp industry is discovering anew the injured worker.  Using the term “claims advocacy,” claims professionals say they want to anticipate and support the injured worker as she tries to navigate the medical system, keep her home life in order, and return to work. This is a welcome shift from a reactive to a proactive approach in managing claims.

Let’s take the claims advocacy concept from daily practice of thousands of claims and medical professionals to legislators in fifty states.  Politicians set the rules for workers’ comp.  Is there a state that has reviewed its rules in-depth to consider how they really impact the injured worker?  A “worker advocacy” approach to legal review would discover outmoded, sometimes indefensible laws.

Choice of medical provider

Most states allow the injured worker complete or near-complete freedom to select her medical provider. Twenty-six states assign to the employer complete or partial control over the selection of medical provider.  Surveys over many years show that injured workers want freedom to choose. Two recent studies have seriously challenged the justification for employer control. 

In 2017, WCRI analyzed how choice of provider laws related to claims experience. Contrary to conventional wisdom, when given the power to pick their doctors, workers do not cause medical and indemnity costs to soar. The idea of masses of knowing, self-maximizing injured workers who pull the levers to stay out and run up costs is a figment of the imagination.

Now, an article in the Journal of Occupational and Environmental Medicine by respected experts in workers’ comp concludes that “States that permit employer selection of treating physician have slightly higher cost due to the higher prevalence of attorney involvement in the claims process.” In other words, employer choice laws increase claims costs.

Waiting periods

All state workers’ compensation systems hold off replacing wage loss for a few days. States are roughly evenly divided between holding benefits until the fourth day and the until the eighth day.  The waiting period is paid to the worker if she stays on disability for a period of time, typically for seven or fourteen days.  It’s worth noting that Texas opt out benefit plans often do not have waiting periods.  

Waiting periods were justified on two grounds — apparently, because there is hardly any thoughtful discussion about why they exist.  First, they were a recognition of built in delays in reporting and response.   This rationale probably had merit 90 years ago but is questionable today. A supervisor’s smartphone can within minutes of the incident take and transmit a video of the site of an injury to the claims organization.  Immediate triage by phone or telepresence tells the claims payer much of what it needs to know about the injury. 

The second rationale for a waiting period is that immediately awarding indemnity benefits is supposed to encourage workers to file frivolous claims.  Like the first rationale, time has not been gracious. Pretty much every well-run employer today uses a process to get same day medical care for its injured workers and has modified duty to prevent days off.

The National Commission on State Workmen’s Compensation Laws wrote in 1972 that waiting periods of over three days were “inequitable.” It urged that retroactive payment commence no later than two days after the close of the waiting period.

Wage replacement

Being on wage replacement for many is a form of torture to prove you are really disabled. 

Disability insurance, both occupational and non-occupational, almost always calculates the beneficiary’s income replacement check by using a formula. Almost all states set the wage replacement rate as a tax-free percentage, usually 66 2/3% of the injured worker’s gross pre-injury wage. 

The 1972 Commission discovered replacement rates as low as 30%. It recommended that states set the benefit as a percentage, at least 80%, of the worker’s disposable income after taxes. The disposable income is calculated after taking into account estimated housing and food costs. Very roughly 66 2/3rds of gross wages tax free may be around 80% to 90% of spendable income, after taxes. 

But the current rules cause many injured workers to suffer a decline in take home pay of more than 15%, which is a rule of thumb for hardship.  Many will experience a shortfall of over $500 a month in take home, another signal for hardship.  No state to my knowledge has ever looked into this.

Cap on weekly wage replacement

All states impose a maximum cap on weekly wage replacement benefits.  The standard cap is a percentage, say 100%, of the average wage in the state. 

The reasoning for this cap has always seemed to me a mystery. Terry Bogyo says that when workers’ compensation systems were created, law drafters wanted a system focused exclusively on line workers, the ones who predictably were in harm’s way of injury, day after day. One way to effectively remove higher level managers from the beneficiary pool was to put a weekly cap on benefits. 

Again, we have a benefit out of sync for our time.   The 1972 commission recommended that states put the cap at 200% of the state’s average weekly wage, far above current laws.  Bogyo says they should be based, not on average wage, but on a percentile of wages in a state. A 90^th percentile cap would be an amount equal to the wages of the 90^th highest paid worker in the state.

ABOUT THE AUTHOR

Peter Rousmaniere is widely known throughout the workers’ compensation industry, both for his writing and consulting experience. Based in the picture perfect New England town of Woodstock, VT, he is a regular on the conference circuit, and is deeply in tune with trends and developments within the industry. His passion is writing and presenting on issues largely related to immigration, and he maintains a blog on the subject at www.workingimmigrants.com.

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