Despite a decrease of 6.4 percent in the costs for workers' compensations claims since 2010, Illinois still has one of the higher cost-per-claim averages compared to the other states, according to recent analysis.
The Workers Compensation Research Institute (WCRI), based in Cambridge, Mass., found the average workers' compensation claim in Illinois at $48,898, 21 percent higher than the median cost per state. The only other states with higher rates are Virginia, Georgia, Pennsylvania, North Carolina and Louisiana, which has the highest cost per claim averaging over $55,000. Michigan has the cheapest average at $30,000.
The recent report by Evelina Radeva, CompScope Benchmarks for Illinois, 17th Edition, concluded that the decrease is directly linked to past legislation signed by the state legislature in 2011.
“The 6.4 percent decrease mainly reflects the impact of the 30 percent reduction in the fee schedule rates for all medical services, which took effect under 2011’s Illinois House Bill 1698,” said WCRI legal counsel and executive vice president Ramona Tanabe.
“Despite this decrease, the average total cost per claim in Illinois was 21 percent higher than the total cost per workers’ compensation claim in the median WCRI study ... for 2013 claims evaluated through early 2016,” Tanabe said. “Indemnity benefits were the largest component of total workers’ compensation costs in Illinois, accounting for 44 percent of all paid dollars for claims originating in 2013, and 49 percent of all paid dollars dating back to claims with injuries in 2011 and payments by 2016.”
The report showed that the issuance of indemnity benefits from those who filed worker’s compensation claims was higher in Illinois versus anywhere else in the United States. This was also the case for medical claims, based on the use of third-party professional services to facilitate the processing of claims that result in medical payouts.
The increase of indemnity benefits was a manifestation of the effects derived from higher wages for employees, longer stints of temporary disability status and recurring lump sum settlements from permanent partial disability claims.
Based on other findings in the report, WCRI concluded that the business environment became more attractive as state lawmakers have made policy decisions to reduce workers’ compensation costs in a variety of ways. Gov. Bruce Rauner’s “Illinois Turnaround” agenda aims to make the state more business-friendly. The plan will attempt to enact reforms to end frivolous lawsuits, provide more choice for workers in regard to union membership, phase in a minimum wage increase and bring changes to workers' compensation policy.
The WCRI report also provides findings that workers' compensation-related litigation costs were $5,065 per claim, slightly above the median cost per claim per state of $5,006. The study, in terms of total litigation expenses, totaled the cost of a defense attorney, medical-legal expenses and ancillary expenses like filing fees.
Illinois cost for medical payments per claim, the study concluded, is one of the highest in the nation. An analysis from cost data from 2013 and 2016 showed that these costs are 24 percent higher than the national median cost per claim per state at $20,354. For 2015 and 2016 data, the cost per claim is even higher at 28 percent over the national median.
Other findings include metrics that indicate Illinois has high litigation involvement per case. Specifically, 42 percent of these types of claims involve costs incurred for hiring a defense attorney, which is one of the higher rates of defense attorney involvement in this type of litigation. Thirty-three percent of these claims, in addition, had at least one medical- or legal-related expense. This only happened at a rate of 24 percent in other states involved in the WCRI study.
In a broader context of the research, premiums for workers' compensation put Illinois eighth in the nation for 2016.