Workers’ Compensation in Arkansas: Administrative Inventory.

Extensive changes to the Arkansas workers’ compensation system in 1993 revised the definition of a compensable injury, introduced managed care, required disability rating guidelines, and added features that provided additional incentives for employers to return injured workers to suitable work. The system now is experiencing a period of stability, and most system participants agree the system works reasonably well for both workers and employers.

Employers and insurers value the predictability brought about by the 1993 reforms, although some employer representatives say that some court decisions since 1993 have “diluted” the impact of these reforms. Most workers’ representatives also note that the system has improved overall, but say some areas still could be improved. According to workers’ representatives, a major problem with the law change is the exclusion of many workers with job-related but gradually occurring injuries. Other concerns include delays in resolving disputed claims, low statutory benefit levels, premature release to work, and the lack of information provided to workers about possible entitlement to the wage-loss portion of permanent partial disability benefits.

Among our findings:

• Rising medical and indemnity benefits per claim were cost drivers in policy years 1999 through 2002. Average incurred medical benefits per indemnity claim grew rapidly at 7.9 percent annually on average; average incurred indemnity benefits per indemnity claim grew 4.7 percent annually on average (both adjusted for inflation).

• Arkansas is one of ten states that ties the maximum weekly TTD benefit to less than 100 percent of the statewide average weekly wage (SAWW). As of January 1, 2004, at 85 percent, Arkansas’ $453.00 maximum weekly temporary total disability (TTD) benefit, as a fraction of the SAWW, ranked the state 42^nd among the states. About one in six injured workers was affected by the state’s relatively low statutory maximum weekly TTD benefit.

• Overall, the speed of formal dispute resolution in Arkansas was faster than in the typical state WCRI has studied. Agency officials said there was effectively no formal hearing backlog, and parties to a dispute who are ready to proceed can generally get a formal hearing date within 30 days. According to agency data, there was a statewide average of 6.5 months from hearing request to a formal hearing and opinion by a judge among cases closed in fiscal year 2003. This interval was shorter than in six of nine other states WCRI studied over the past decade (for which comparable data are available).

• Employers have strong incentives to return workers to suitable work at preinjury wages. Two system features promote this. First, Arkansas is one of seven states with a “two-tier” permanent partial disability (PPD) benefit structure. If a worker does not return to work at preinjury wages, he or she is entitled to PPD benefits based on impairment and may also receive additional weeks of PPD benefits based on loss of wage-earning capacity. Second, if an employer refuses to return an injured employee to work when suitable employment is available, the employer may be liable to pay additional compensation for up to one year.

Workers’ Compensation in Arkansas: Administrative Inventory. Duncan S. Ballantyne. August 2005. WC-05-18.