WCRI: Growth in Workers’ Comp Claims Costs High in Louisiana

Between 2011 and 2016, the average total cost per workers’ compensation claim grew at faster pace than in many other states examined in a recent study by the Workers’ Compensation Research Institute.

WCRI’s CompScope Benchmarks for Louisiana, 18th Edition, compares workers’ comp systems in 18 states. In examining how system performance metrics have changed, mainly from 2011 to 2016, WCRI analyzed claims with experience through 2017 for injuries up to and including 2016.

The study found that total costs per claims with more than seven days of lost time were higher in Louisiana than other study states. Since 2012, costs grew at 4.4 percent per year compared with the 18-state median of 2.9 percent.

Costs per claim were higher in Louisiana for all key cost components studied — medical payments, indemnity benefits (48 percent higher than the 18-state median) and benefit delivery expenses. The state had a longer duration of temporary disability payments — nine to 16 weeks longer than in other states with a wage-loss benefit system.

Medical payments per claim in Louisiana were among the highest of the study states. Higher and increasing hospital payments, especially hospital outpatient payments, were a key driver in rising medical costs per claim.

Louisiana had higher benefit delivery expenses per claim than in most study states and those expenses continue to increase, partly due to payments to defense attorneys. The share of defense attorney payments as part of the overall benefit delivery expense grew in Louisiana from 19 percent in 2011 and 2012 to 23 percent in 2015 and 25 percent in 2016.

While Louisiana had a higher percentage

of claims with a lump-sum settlement than most study states, since 2011, lump-sum settlement amounts have remained fairly stable. And for 2014 claims evaluated in in 2017, the percentage of settlements greater than $50,000 was slightly lower in Louisiana than other states.

Louisiana had more long-duration temporary disability claims than other wage-loss states. Those long durations were partly offset by a lower maximum weekly statutory temporary total disability (TTD) benefit than in many other study states. Louisiana’s TTD benefit is set at 75 percent of the statewide average weekly wage compared with 100 percent or higher in some of the other states.

Since 2011, wages for injured workers in Louisiana grew at a rate of 1.5 percent, a lower percentage than in many states in the study.

The 18 states analyzed in the CompScope study are Arkansas, California, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Tennessee, Texas, Virginia and Wisconsin.