Variations in worker compensation claims by company—the potential for achieving a significant reduction in claims

Abstract

Variations in worker compensation claims between states are highlighted when legislators consider "reforms" to reduce workers' compensation costs. These reforms overlook the larger variation between companies within the same type of industry in the same state. Possible reasons for this variation between companies and its implication on reducing morbidity and health care costs are discussed.

Economic Evaluation and Systematic Review of Publicly Available Workers’ Compensation Practice Details and Mod Rate Calculators Applied to Upper Midwest Agriculture

“…13 Depending on the state, employers may not be required to provide workers' compensation to their employees. 12,14 Farmers that are self-employed or run a family farm may not be eligible for workers' compensation, and of the farmers that do have a workers' compensation policy, their policy often does not cover family members and dependents. 3,15 Small family farms (less than $350,000 in annual gross cash farm income) comprised almost 90% of US farms in 2015.…”

“…Since the E-Mod is adjusted based on the number of claims received as well as the type of claim, companies can artificially decrease their yearly premiums by underreporting the number of injuries they have per year or only focus on reducing the incidence of high-cost injuries. 3,14,18,31 If employers minimize their own premiums as an economic goal, then they may strategically choose between these possible responses by aiming to decrease the number of claims first, as frequent losses are more heavily weighted in the E-mod calculation. In some cases, the underreporting is unintentional or is a function of employee behavior.…”

“…Companies that wish to decrease their insurance premiums may coerce their injured employees into remaining silent, may willfully neglect to submit claims, only submit low-cost claims, or contest the injured employee's claim to compensation benefits. 3,14,18 Employers may also selectively target workplace safety efforts to reduce high-cost claims and neglect to address persistent health and safety issues such as repetitive stress injuries. 31,34 Such employer practices produce initial gains in terms of reduced claims but can be ineffective and detrimental over time for the company, company employees, and society as a whole.- 3,18,31 On the other hand, employees or employers may err in the other direction, where return to work may happen later than what is optimal either from a personal standpoint or a social one.…”

Compensation patterns for healthcare workers in British Columbia, Canada

“…That is, the actual number and costs associated with work-related injuries and illnesses are higher than those reported by the workers’ compensation bodies. This phenomenon of under-reporting is not unique to Canada; recent studies in the USA have also reported that work-related injuries are under-reported to compensation bodies 16 – 21…”