Workers’ Comp Group Defends Work in North Carolina

A non-profit workers’ compensation research organization that maintains its work is objective has found itself at the center of a controversy in North Carolina over whether to trim workers’ compensation benefits.

A group of trial lawyers has alleged that the Workers’ Compensation Research Institute (WCRI) is lending support to benefit changes with its recent report claiming that the state’s cost per claim is among the highest in the country.

The WCRI has defended the integrity of its work and denies being an advocate for any particular changes.

Currently, there is no specific bill but the North Carolina Advocates for Justice, the trial attorney group, is sounding the alarm about a move to limit the number of weeks benefits would be paid to injured workers.

“Right now corporations and insurance companies are lobbying the legislature to cut benefits to injured workers,” said Dirk Taylor, chief executive officer for the Advocates for Justice, citing a business proposal to cap benefits at 500 weeks.

Taylor said that such a change would result in cost shifting because injured workers would have to rely on Social Security disability benefits and Medicare or Medicaid, which would benefit private insurers. “The cost insurance companies have been paying will be shifted onto taxpayers,” he said.

In 2005, the state’s Chamber of Commerce unsuccessfully pushed for a cap of 500 weeks and it remains committed to the proposal. John McAlister, vice president of government affairs for the chamber, said it is time for lawmakers to act. “From our perspective it is time to make changes to bring costs down,” he said.

WCRI Controversy

In its CompScope Benchmarks for North Carolina, the WCRI found that the state’s total costs per workers’ compensation claim are the highest of the 16 states included in the study. North Carolina total costs per claim were just over $42,000. The total cost per claim grew 47 percent between 2003 and 2004 and 2008 and 2009, or 17 points higher than other states.

McAlister said the study supports the need for reform. “Clearly there needs to be a change,” he said.

However, the Advocates for Justice claim the report is misleading since North Carolina doesn’t cover many minor workplace accidents. Therefore, the group says, the state has fewer severe injury claims, which naturally leads to a higher cost per claim.

The trial attorneys argue that a more accurate picture is what employers are paying for coverage and they cite a 2010 Oregon study ranking states by premium, where North Carolina ranked 23 out of the 50 states with a premium rating index of $2.12 per $100 of payroll. Based on 2009 rates, that placed the state at 104 percent of the study’s overall median value of $2.04. The state’s ranking was virtually unchanged from the 2008, when it ranked 22 out of the 51 jurisdictions.

“The WCRI is funded by insurance companies and large corporations and routinely issues reports that support ‘reforms’ that will increase their contributors’ profits,” Taylor said.

WCRI Executive Director Richard Victor said the critics are misinterpreting the WCRI findings. For one, Victor said, there is no conflict with the Oregon study. He said a state could have a high cost per claim but rank low in employers’ cost if that figure is offset by a low frequency of claims. Likewise, a state could rank high in the study if its claims frequency is high. “Both studies are meaningful,” Victor said. “But they (Advocates) want to focus on employers’ cost and we don’t benchmark that.”

As for North Carolina, Victor said the state does have a lower number of claims for a state its size. However, he said, its cost per injury is higher. “Hospitals are getting more reimbursements than other states,” he said Victor acknowledged that the institute does receive money from insurance companies, state governments, health care organizations, managed care companies and other non-profit entities. However, he said, the sources of funding do not infringe on its studies. “If the (Advocates) are saying our work doesn’t have integrity, they are wrong,” he said.

Victor said WCRI is dedicated solely to research and is not an advocacy organization.

“For 25 years we have been frustrating public policymakers who have asked us what to do when it comes to reforming their system,” said Victor. “We don’t have the kind of experience to know what is right for a state. Those are value judgments that have to be made by policymakers.”

Topics Workers' Compensation North Carolina