ARKANSAS STAKEHOLDERS SEE W.C. SYSTEM AS STABLE; WCRI STUDY NOTES RISING INCURRED MEDICAL AND INDEMNITY BENEFITS PER CLAIM, LOWER STATUTORY BENEFIT LEVEL

CAMBRIDGE, MA, September 15, 2005—The Arkansas workers’ compensation system has experienced a period of stability after extensive reforms were passed in 1993, according to a new study by the Workers Compensation Research Institute (WCRI).

The law change in 1993, in part, revised the definition of 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.

Some concerns remain, however, among both employers and workers. For example, some employer representatives say that several court decisions have diluted the impact of these reforms. On the other hand, some workers’ representatives are critical of the exclusion of many workers with job-related, but gradually occurring injuries and also cite delays in resolving disputed claims and relatively low statutory maximum weekly temporary disability benefit levels.

The study Workers’ Compensation in Arkansas: Administrative Inventory is the 37th in a series of Administrative Inventories of state workers’ compensation systems published by the Cambridge, Mass.-based WCRI.

The WCRI study found that rapidly rising medical and indemnity (wage replacement payments to injured workers) benefits per claim were system cost drivers in recent years. Average incurred  medical benefits per indemnity claim (inflation adjusted) rose 7.9 percent annually from policy years 1999 through 2002, while average incurred indemnity benefits per claim grew 4.7 percent annually (adjusted for inflation).

The study reported that about one in six injured workers was affected by Arkansas’ relatively low statutory maximum weekly temporary total disability (TTD) benefit. 

As of January 1, 2004, Arkansas’ weekly TTD benefit of $453, representing 85 percent of its statewide average weekly wage (SAWW), placed it 42^nd among the states. Arkansas is one of 10 states that tie the maximum weekly TTD benefit to less than 100 percent of the SAWW.

The study found that the formal dispute resolution process in Arkansas was faster than in the typical state examined by WCRI. Arkansas Workers’ Compensation Commission (AWCC) officials say there is effectively no formal hearing backlog in the state.

Data from the AWCC showed 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 (for which comparable data are available) that WCRI has studied in the past ten years.

The study also cited two system features that combine to provide strong incentives for employers to return employees to work.

Arkansas has a two-tier permanent partial disability (PPD) benefit structure. Under this system, if the worker returns to work at pre-injury wages, he or she receives PPD benefits based on anatomical impairment only. 

Otherwise, he or she receives benefits based on impairment and then might also receive additional weeks of PPD benefits based on loss of wage-earning capacity.

The law also states that if an employer unreasonably refuses to return an injured employee to work when suitable employment is available within the employee’s limitations, the employer may be liable to pay the worker additional compensation for up to one year.

The Workers Compensation Research Institute is a nonpartisan, not-for-profit membership organization conducting public policy research on workers’ compensation, health care and disability issues. Its members include employers, insurers and governmental entities, insurance regulators and state administrative agencies, as well as several state labor organizations.