Illinois’ Cost per Workers’ Comp Claim Trending Down

The average total cost of a workers’ compensation claim in Illinois has dropped by 6.4 percent since 2010, but the state still has relatively high costs per claim, according to a report by the Workers Compensation Research Institute (WCRI).

The state’s cost per claim remains higher than most of the 17 other states studied in a recent report, CompScope Benchmarks for Illinois, 17th Edition, the WCRI said.

“The 6.4 percent decrease mainly reflects the impact of the 30 percent reduction in the fee schedule rates for all medical services, which took effect under 2011’s Illinois House Bill 1698,” according to Ramona Tanabe, WCRI’s executive vice president and counsel.

The average cost per workers’ comp claim in Illinois is 21 percent higher than in “the median WCRI study state for 2013 claims evaluated through early 2016,” Tanabe stated in the group’s announcement.

Indemnity benefits per workers’ compen claim were also higher in Illinois than in the typical state, as were medical payments per claim. The indemnity benefit finding reflected higher wages for injured workers, longer duration of temporary disability, and more frequent and costly permanent partial disability (PPD)/lump-sum settlements, WCRI found.

Higher prices for, and utilization of, professional services led to Illinois’ higher-than-typical medical payments per claim, according to WCRI’s study, except for payments involving evaluation and management services.

Other findings of the study include:

• Litigation expenses per claim grew faster in Illinois when compared with the other 17 states WCRI studied.

• In Illinois, 42 percent of workers’ compensation claims involved defense attorneys if the injured worker had seven-plus days of lost time — a higher rate of defense attorney involvement than in all other states WCRI examined.

• Thirty-three percent of Illinois claims had at least one medical-legal expense vs. 24 percent in the typical study state.

Regardless of WCRI’s findings, one national insurer trade group says Illinois remains a competitive state for workers’ comp and that legislation recently passed by the Illinois House would harm the workers’ compensation system in the state.

American Insurance Association (AIA) said HB 2525 would require insurers to submit rates to the Illinois Department of Insurance and then wait up to 30 days before using them. According to the AIA, the bill removes considerable flexibility for both insurers and their customers from the marketplace, adds unnecessary delays and imposes significant resource demands and costs.

Another measure, HB 2622, would create the Illinois Employers Mutual Insurance Company (IEMIC), a state-sponsored fund to provide workers’ compensation insurance in Illinois.

“Illinois is the most competitive state for worker’s compensation insurance,” Steve Schneider, Midwest region vice president for the AIA, said in the group’s announcement. “More than 300 insurers compete for the right to earn a customer’s business. Competition is intrinsically good for all Illinois employers who must purchase this mandated, comprehensive coverage. This competition stems from Illinois’ current open competitive rating law that has been in effect for 35 years. HB 2525 would eviscerate that law and its benefits for Illinois employers.”

Schneider also said the creation of a state-sponsored workers’ compensation insurance company via HB 2622 would disrupt the private market. He added that there is no reason “for Illinois to create its own to compete against private sector insurers and jobs when no major crisis is present and massive government intervention is not necessary.”