December 1, 2002 Related Topics:
Permanent partial disability benefits (PPD) are the most expensive, complex and litigated component of many workers’ compensation systems. In many states, their costs to employers and insurers are several times larger than for temporary disability claims. Permanent disability for work injuries and illnesses imposes substantial costs on disabled workers and their families, as well.
The cost of PPD is driven by the fraction of claims that receive PPD benefits, their severity and the benefit levels awarded. This study identifies factors associated with higher or lower rates of PPD in six states – California, Connecticut, Florida, Georgia, Texas and Wisconsin – and is a first step in the process of understanding the incidence of PPD rates.
The percentage of claims with PPD or lump-sum payments ranges widely among states, from 29 percent in Wisconsin to 54 percent in California and Texas (see Table A). Even for similar types of injuries, PPD rates vary significantly. As the table shows, very large differences exist for back sprains and strains, from 20 percent (Wisconsin) to 59 percent (California); the range for fractures is somewhat less, from 41 percent (Wisconsin) to 59 percent (Connecticut).
Table A PPD As a Percentage of Claims with More Than Seven Days of Temporary Disability, by State and Injury Type
Injury CA CT FL GA TX WI
All 53.9 43.1 45.0 43.5 53.9 29.1
Back sprains/strains 58.3 38.8 49.1 45.1 59.2 20.2
Fractures 51.0 58.8 46.6 46.1 54.2 40.9
A strong association exists between the duration of temporary disability benefits and the probability that a case will result in the payment of PPD benefits. This suggests that if temporary disability duration were reduced in the high PPD states such as California and Texas by resolving cases more promptly and returning workers to employment more rapidly, fewer PPD cases and lower system costs may occur.
Unlike most states, Georgia does not use the maximum medical improvement (MMI) standard as a basis for ending temporary disability. The absence of MMI lengthens the duration of claims in Georgia and increases the use of lump-sum settlements.
High PPD rates are frequently associated with soft tissue injuries (e.g., back sprains and strains), which are among the most difficult to diagnose and evaluate. However, in two states, Connecticut and Wisconsin, the highest rates for PPD are found in claims for fractures – injuries that can be more objectively evaluated. In Connecticut, for example, the incidence rate for factures exceeds the PPD rates for fractures in all other states in the study. In Wisconsin, the PPD rate for fractures is twice as high as the rate for back cases in that state.
Who Obtains Permanent Partial Disability Benefits: A Six State Analysis. Peter S. Barth, Mike Helvacian, Te-Chun Liu. December, 2002. WC-02-04.
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