The increase in payments for workers’ compensation in 2002 in Mississippi was only about half that of the year before, and the 5.6% increase was lower than the national average. But there are still concerns about keeping the cost of workers’ compensation affordable.
A report released recently by the National Academy of Social Insurance (NASI) showed that total workers’ compensation payments in Mississippi increased 5.7% from $271 million in 2001 to $287 million in 2002. Workers’ compensation pays for medical care and cash benefits for workers who are injured on the job or become ill due to job-related causes.
The NASI study showed payments for medical care grew faster than cash benefits to Mississippi workers in 2002. Payments for medical care rose to $163 million in 2002 from $148 million in 2001, an increase of 10.3%. Cash payments to workers held steady at $123.1 million in 2002 from $123.0 million in 2001, an increase of 0.1%.
Mississippi’s total payments grew more slowly than for the nation as a whole, which saw an average increase of 7.4% to a total of $53.4 billion. Nationally, spending for medical benefits rose by 9.4%, while cash payments to workers rose by 5.8%.
Duke Blakeslee, an attorney in Gulfport who has a large part of his practice dealing with workers’ compensation, said medical expenses for workers’ compensation are controlled by a fee schedule in Mississippi. He said that program instituted in 1993 is helping to contain costs.
“We have had a fee schedule for some time now,” Blakeslee said. “The fee schedule does help contain medical expenses to some extent, helping limit increases in the cost of workers’ comp in Mississippi.”
Cash benefits for injured workers are tied to the Mississippi average weekly wage. The maximum compensation rate is two thirds of Mississippi average weekly wage. So whenever the average weekly wage goes up in the state, payments go up by the same percentage.
Mississippi continues to have the lowest average weekly wage of any of the 50 states.
While it is good news Mississippi is beating the national average in increases in workers’ compensation payments, Blakeslee believes there are a couple of areas where the Workers’ Compensation Act could be approved. One is with regard to bad faith litigation.
“Workers’ compensation carriers, which could include self-insured employees or pools of employers, can be sued in civil cases if they don’t voluntarily pay disputed benefits the employee is later found to be entitled to,” Blakeslee said. “That becomes a jury issue, and some juries can be prone to give very large verdicts. In my view, that is the biggest danger facing worker’s compensation system — the threat of bad faith liability arising from one or more claims. Those bad faith judgments can be pretty severe.”
For example, there was a $5.1 million bad faith judgment against a self-insured employer in Hinds County in 2000. That judgment was later reduced by the Mississippi Supreme Court to $500,000. Blakeslee said he is aware of a number of bad faith cases that have been filed arising out of workers’ compensation claims.
“The concern is if enough employers, insurance companies or pools get hit with big bad faith judgments, either it will run up the cost of workers’ comp or run people out of the market,” Blakeslee said. “That’s the really big concern. There are other parts of the act that I think could be tweaked a little bit, and make it a little bit fairer. But if you get right down to it, the really big threat to the workers’ compensation system in our state is the threat of bad faith liability arising out of workers’ compensation claims.”
Mississippi Insurance Commissioner George Dale said availability of workers’ compensation insurance in the state is not currently “a front-burner issue.”
“Right now workers’ comp is in better shape than any other insurance I regulate as far as limited rate increases and decent markets for companies,” Dale said. “All that goes back to experience. When experience is good, the market tends to show that.”
Dale believes tort reform in the past couple years in Mississippi has had a beneficial impact, as well as more emphasis on safety standards.
“By implementing good safety standards, employers have realized that safety does have a direct bearing on the cost of workers’ comp insurance,” Dale said. “Unfortunately, that doesn’t work for health insurance and other forms of insurance. But for workers’ comp insurance, it does work.”
David Corum, assistant vice president of the American Insurance Association headquartered in Washington, D.C., said that as healthcare costs increase on the non- workers’ comp side, there is ongoing concern with the shifting of costs to the workers’ comp system where there tend to be fewer controls over rising costs.
“We are very concerned with workers’ compensation costs,” Corum said. “The fact that costs in Mississippi are increasing at a slower rate than countrywide shouldn’t give you too much comfort because costs are rising, and rising rapidly. It is an ongoing challenge to manage those costs and keep control over increasing medical costs.”
On the plus side, Corum said there is no doubt workers’ comp is a competitive insurance market, and employers are definitely benefiting from that competition. None- the-less, underlying cost drivers in the workers’ compensation system are creating pressure on prices. “We have to stay vigilant in controlling those costs,” Corum said.
“Otherwise, there will be inevitable results on prices. The underlying cost of the system ultimately determines what the cost will be. While competition is working to control insurance prices, we have to remain concerned with the underlying cost of the system and the increase of 5.7%, while not a dramatic increase is still an increase. Other states are seeing double-digit increases. Mississippi the year before had a 10.3% increase. You certainly wouldn’t want that to continue indefinitely.”
Corum said there is a problem countrywide within the workers’ compensation system in that there is a lot inappropriate treatment being provided. If workers receive inappropriate, inadequate or excessive treatment, or treatment provided by a doctor who is not qualified, that creates greater cost and longer disability.
“One of the biggest challenges we face in every state is making sure injured workers receive medical treatment that is consistent with the principles of evidence-based medicine,” Corum said. “There needs to be assurance they don’t receive treatment that hasn’t been demonstrated to have a positive outcome. We see a lot of injured workers subjected to treatment that is inappropriate or excessive treatment. It often involves chiropractic care that goes on and on with no medical evidence to suggest it is good.
“The industry is starting to focus more on making sure injured workers are getting appropriate treatment. While most medical providers are diligent in providing good quality care, there are enough out there who are willing to exploit the workers’ compensation system that we need to be concerned. We have seen it big time in a number of states like California, Texas and Florida where there is an awful lot of inappropriate medical treatment being provided. It is a fact that there are some medical providers who are exploiting the system because workers’ compensation is often very generous paying compared to Medicare or other programs. There are enough providers out there who respond to those financial incentives. Unfortunately, it is a growing problem.”
It is recommended injured workers get a second opinion, do research and ask questions. Corum said while most doctors are trustworthy, you can’t always take what your doctor tells you as the gospel’s truth.
“We have seen injured workers subject to multiple surgeries, and what started out as a modest problem has turned into a permanent disabling condition as a result,” Corum said. “What we need is a way to challenge providers. They need to be subjected to reasonable questions about the appropriateness of what they are recommending. While patients may not be familiar with the latest scientific evidence of what is appropriate or not, lots of time carriers they contract with are. What we need is a way of asking reasonable questions and getting answers.”
Contact MBJ contributing writer Becky Gillette at firstname.lastname@example.org.