Rapid Rise in Workers' Comp Benefits in Texas

Workers' compensation benefit costs increased significantly in\r\nTexas during recent years, according to a study by the Workers\r\nCompensation Research Institute.

Workers'' compensation benefit costs increased significantly in Texas during recent years, according to a new study by the Workers Compensation Research Institute (WCRI).

The study reported that the costs of medical benefits and indemnity benefits -- wage replacement payments for lost-time injuries -- rose nearly 10 percent from 1997 to 1998, considering the experience with the claims through 1999. Growth in medical and income benefit costs was about equal.

Contributing to the growth in indemnity costs was an increase in claims with more than seven days of lost time. In addition, Texas experienced steady growth in permanent partial disability (PPD) claims, up nearly 2 percentage points per year for the period.

More than 50 percent of all workers'' compensation claims with over seven days lost time in Texas were PPD claims.

An earlier WCRI study found that Texas medical providers use more visits and services than providers in other states, when treating similar claims. It found this to be especially true of chiropractors in Texas.

Expenses associated with delivering benefits -- attorney fees, medical cost containment, medical-legal expenses and other litigation and claims adjusting expenses -- also rose, up 9 percent from 1997 to 1998 following several years of double digit increases.

The study, CompScope Benchmarks: Multistate Comparisons, 1994-1999, provides a comparison of the workers'' compensation systems in eight large states on key performance measures such as benefit payments and claim costs, timeliness of payments and attorney involvement, by analyzing a similar group of claims and adjusting for industry mix, wage levels and injury type.

"Overall, workers'' compensation claim costs are high in Texas," said Dr. Richard Victor, executive director of the Cambridge, Mass.-based WCRI.

"Given its high system costs, policymakers in Texas need to understand why medical costs and utilization, in particular, are so high and growing rapidly," said Victor. "Another issue for further study is the high percentage and growth of costly claims involving permanent partial disabilities."

The study of eight states, representing 40 percent of workers'' compensation benefits nationwide, also found that Texas had the highest average total cost per workers'' compensation claim ($14,465) of the states reviewed.

The other states included in the study were California, Connecticut, Florida, Georgia, Massachusetts, Pennsylvania and Wisconsin. By contrast, the 8-state median was $11,224.

Given this finding, it''s not surprising that Texas led the study states in both medical and indemnity benefit costs, according to WCRI.

The average medical benefit per claim of $7,650 is two and one-half times the cost of medical benefits in Massachusetts, the state in the study with the lowest medical payments. Indemnity benefits per claim in Texas averaged $5,881, about double those in Wisconsin, the state with the lowest indemnity benefit payments.

However, the frequency of defense attorney involvement in Texas is among the lowest of the states studied. Less than 8 percent of 1997 claims as of mid-1999 in Texas involve defense attorneys, a measurement of litigiousness in the workers'' compensation system. By contrast, about 30 percent of these claims involve defense attorneys in Florida and Georgia.

by Virginia Foran

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