Who Settles in Workers' Compensation? An Analysis of How Trends in Claim Settlements Relate to Workers' Compensation Benefit Changes in Oregon

Abstract

Who Settles in Workers' Compensation?An Analysis of How Trends in Claim Settlements Relate to Workers' Compensation Benefit Changes in Oregon W orkplace injury is costly to workers and firms (Leigh, 2011). Workers' compensation is designed to ensure that workers are compensated for medical costs and wage losses associated with a workplace injury and, at the same time, to limit the firm's exposure to the overall costs associated with the injury. The process of determining benefits and adequate compensation can be costly and complicated. Sometimes, the benefit process evolves smoothly; at other times, the process can lead to extended negotiation or disputes to determine the appropriate benefit and can potentially result in a claim settlement in lieu of benefits.In this report, we explore how permanent workers' compensation benefits and settlements interact. In some cases, a worker who settles relinquishes the right to pursue permanent partial disability (PPD) or other indemnity benefits. As a result, changes in the value of the PPD benefits a worker anticipates receiving could affect that worker's decision to settle.We examine a policy change in Oregon as a case study. In 2003, Oregon Senate Bill 757 (SB 757) made substantial changes to PPD benefits in the Oregon workers' compensation system, simplifying the evaluation system and the benefit-calculation process (see Oregon Legislative Assembly, 2003). As a result of this simplification, some claimants received substantially higher PPD benefits than they would have prior