There is no single answer to the question, “Which states have the best system?” Depending on the goals and perspective of the different stakeholder groups involved in workers’ compensation systems, the definition of “best” will vary.
When considering changing their systems, however, policymakers often want to learn about Oregon–a system with a reputation for achieving certain desired results, including reasonable income benefits that are typically delivered accurately and promptly with lower litigation levels and employer costs that are affordable and stable.
Many of these positive results likely flow from the design of certain system features. This WCRI report highlights the Oregon system features that have helped to achieve those results. Two caveats: First, many system features create mutually reinforcing incentives that shape positive results. If other states adopt only part of a state’s system features, those states are unlikely to achieve the same results. Second, a process that works in one state is not guaranteed to achieve identical results in another state. Even in the wake of large system changes, participants will frequently try to find ways to continue past practices.
Key lessons from Oregon:
- Most system participants agreed that cooperation between labor and management through the Management-Labor Advisory Committee (MLAC) is one of the system’s greatest strengths. The MLAC is unusually effective as a force for orderly system improvement. The governor and (usually) the legislature funnel stakeholder proposals for change through this committee, keeping the interests of management and labor at the forefront of the debate, not those of other interest groups.
- The Department of Consumer and Business Services (DCBS), the state agency, is committed to setting system goals, measuring and monitoring performance, and imposing sanctions against substandard performance, resulting in consistently accurate and timely delivery of benefits. For example, the Workers’ Compensation Division compiles and posts industry performance averages on the DCBS web site. In fiscal year 2006, 99 percent of indemnity claims were reported promptly, 88 percent of temporary total disability payments were timely, and 91 percent of claims were accepted or denied promptly.
- A combination of six key features work together to increase certainty about the determination and payment of permanent partial disability (PPD) benefits and to reduce litigation over the benefit delivery. These features are: reliance on the treating provider to provide the information needed for the impairment rating; use of a guide to rate permanent impairment; objective criteria for determining loss of earning capacity at all stages; active payor involvement in terminating temporary total disability benefits and determining PPD benefits; use of a swift and mandatory mechanism for administrative dispute resolution; and use of a medical arbiter.
- Return to work is enhanced with special program elements aimed at encouraging early return to work and long-term recovery of wages for injured workers. These elements include funding a package of wage incentives, protection for the employer in case the worker becomes reinjured, and reimbursement of the costs of fitting a worker to a job.
Lessons from the Oregon Workers’ Compensation System. Duncan S. Ballantyne. March 2008. WC-08-13.