New Study Details Arizona's Workers' Compensation System

According to a new study by the Workers Compensation Research Institute (WCRI), notable features of Arizona’s workers’ compensation system included a lifetime entitlement to medical and indemnity benefits–payments to replace lost wages–and the active role of the state agency in educating and assisting system participants and reducing litigation. However, injured workers were subject to some of the lowest weekly benefit levels in the country.

At an estimated 57 percent of the statewide average weekly wage (SAWW), the maximum weekly amount for temporary total disability (TTD) benefit of $374.01 was next to the lowest in the country as of Jan. 1, 2003. By contrast, in 22 states, the maximum weekly amount for TTD was 100 percent of the SAWW.

Arizona’s percentage has eroded steadily since 1999, when the equivalent maximum weekly amount for TTD was raised 14 percent from $327.95 to $374.01. As a consequence of the benefit formula, nearly one-half of the workers receiving TTD benefits had them limited by the maximum TTD amount, said the report.

In 45 percent of cases in 2003, the injured worker’s average monthly wage exceeded the $2,400 monthly maximum amount for computation purposes. Workers earning $28,000 a year or more received the maximum monthly benefit. On the other hand, the remaining 55 percent were not affected by the maximum.

The report said that while the low maximum monthly TTD benefit created economic hardship for some, it created a powerful incentive to return to work. Most system participants said the low maximum served as a significant motivator for higher wage earners to remain on the job or return to work as soon as they can.

The study pointed out that the Arizona system placed no time limits on reopening a claim, and settlement agreements did not close out liability for future indemnity or medical benefits. This lifetime entitlement to benefits provided a safety net for workers.

Under these provisions, a worker who experienced a new, additional or previously undiscovered condition that causally related to the workplace injury could reopen a claim. It would then be processed as a new injury claim.

TTD benefits were paid until the worker again reached maximum medical improvement and the right to permanent disability benefits was assessed. In this way, indemnity claims could go though several cycles of disability benefits.

In addition, settlement agreements did not close liability for future medical and indemnity benefits. The effect of these system features was that once an insurer or self-insurer accepted a claim, liability for indemnity and medical benefits continued for life.

The study reported that most system observers in Arizona gave high marks to the active role played by the Industrial Commission of Arizona (ICA) in educating and assisting system participants, monitoring claims and impartially determining key benefit amounts. The actions of the agency helped reduce litigation in cases involving more serious injuries, permanent partial disabilities, that often are disputed in other states.

In 2003, the average interval from the date a case was assigned to a judge to the judge’s award was 7.7 months, placing Arizona in the middle of the states studied by WCRI in the past 10 years.

To purchase the report, visit WCRI’s Web site at www.wcrinet.org.

Topics Workers' Compensation Talent Arizona