Calif. Mental Stress Claims Involving Disability Decrease

An analysis by the California Workers' Compensation Institute found that over a six-year period, psychiatric\r\ninjuries with no physical component accounted for less than 1 percent\r\nof all claims.

Claims for psychiatric injuries with no physical component, once the fastest growing disabling work injury in California, dwindled to a very small but consistent share of workers'' compensation claims closed after 1993, though payments on mental-mental stress claims involving permanent disability still averaged nearly $22,000, according to data from the California Workers'' Compensation Institute (CWCI).

Between the early 1980s and the early 1990s, the California workers'' compensation system saw an eight-fold increase in the number of claims for anxiety reactions and other mental disorders without any connection to physical or traumatic injury, commonly known as "mental-mental" stress claims.

By 1990, the state reported mental disorders accounted for 2.3 percent of all disabling work injuries.

Spurred by concern over the legitimacy of these claims and their rising frequency and cost, the state enacted a series of anti-fraud statutes and tightened compensability standards for psychiatric injuries and post-termination claims, said CWCI.

To measure the incidence and cost of mental-mental stress claims since enactment of these reforms, the Institute analyzed data on 1.7 million 1993-1998 closed claims from the Industry Claims Information System database.

The analysis found that over the six-year period, psychiatric injuries with no physical component accounted for less than 1 percent of all claims.

Furthermore, dispelling the notion that mental-mental stress claims usually result in lost-time, the analysis found 73 percent of the claims were medical-only cases, while only about one out of five resulted in permanent partial disability (PPD) award.

Nevertheless, measured as proportion PPD claims, these psychiatric injuries represented about 2.3 percent of all PPD claims closed between 1993 and 1998, according to CWCI data.

When the Institute took a closer look at the payment data from the closed 1993-98 mental-mental stress claims, it found that payments averaged $6,202 per claim, with insurers paying an average of $1,658 for the medical-only claims, and $21,710 for PPD claims.

Payment figures on PPD claims averaged over the six-year span were skewed to the low side, however, because the 1997 and 1998 claims were still relatively green, so few of the more complex and expensive PPD claims for those years had closed at the time the data were collected, according to CWCI.

The average payout on a mental-mental stress PPD claim was about two-thirds of the average for all PPD claims.

Payment distributions show the biggest difference was in the average amount paid for medical care, though average temporary disability, vocational rehabilitation and "other expense" payments were also lower.

The least significant difference was in the among of the permanent disability award, with mental-mental stress claims averaging $9,580 versus $10,416 for all claims.

As a result, the study found permanent disability consumes 44 cents out of every dollar paid on mental-mental stress claim compared to 35 cents for all PPD claims.

by Virginia Sutcliffe

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