Florida Workers' Compensation Claim Costs Continue Upward Path, WCRI Study Reports.

Business Editors

TALLAHASSEE, Fla.--(BUSINESS WIRE)--Aug. 29, 2001

Workers' compensation claim costs continue their significant growth in Florida, according to a new study by the Workers Compensation Research Institute (WCRI).

The study reported that claim costs rose

nearly 9.5 percent in 1998, following several years of double-digit increases. The 11.7 percent average yearly increase in Florida from 1996 to 1998 was the highest of the eight large states in the WCRI study.

WCRI reported that a 13 percent jump in indemnity benefit costs - payments to injured workers for lost-time - was a major factor behind the overall increase.

Medical payments per claim also rose, but at a slower pace, increasing 4.7 percent from 1997 to 1998. The study cited other factors behind the continued increase in claim costs, including a high and growing percentage of claims with lump-sum settlements and permanent partial disabilities. These claims represent 28 percent of 1998 claims with more than seven days of lost time, up eight percentage points since 1994.

The percentage of claims with more than seven days of lost time also grew, up two points since 1995 to 20 percent in 1998. Minor shifts in this measure can have a large impact on claim costs. The study pointed out that this growth might indicate an increase in more serious injuries.

Benefit delivery expenses - for defense attorney fees, other litigation and claim adjusting expenses, medical cost containment services, and fees for medical-legal exams - rose an average of nearly 25 percent per year from 1996 to 1998 for claims with more than seven days of lost time.

The study, CompScope(TM) Benchmarks: Multistate Comparisons, 1994-1999, provides a meaningful 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.

The study found that Florida is among the most litigious of the eight large states studied. In addition to Florida, the states included in the WCRI study were California, Connecticut, Georgia, Massachusetts, Pennsylvania, Texas and Wisconsin.

"The involvement of defense attorneys in workers' compensation claims - an indicator of litigiousness - is highest in Florida and growing," said Dr. Richard A. Victor, executive director of the Cambridge, Mass.-based WCRI. "About 30 percent of claims with more than seven days of lost time involved defense attorneys in Florida, a nine percentage point increase for claims with 24 months' experience since 1994. By contrast, defense attorneys are involved in less than 8 percent of claims in Texas and Wisconsin."