Study: Time off, lawyers push Illinois workers compensation costs up

Workers’ compensation costs in Illinois have grown every year since reforms efforts in 2011.

A study of workers’ compensation claims through March 2017 by the nonprofit Workers Compensation Research Institute found the state’s average cost to businesses rose by 1 to 3 percent annually since 2011. The study found medical payments, protections against loss (called indemnity), and administrative costs have all contributed to premiums increasing yearly.

The costs make employment more expensive for companies.

The report found more than half of the claims in Illinois involved a lawyer, driving up costs and extending time off the job for workers. Costs in Illinois were higher than all of the other 17 states studied. The study focused on total claim costs, indemnity benefits, overall medical payments, benefit frequency, disability duration, benefit delivery expenses, timeliness of benefit payments to injured workers and other metrics.

“In Illinois, many claims are closed by settlement,” WCRI Executive Vice President Ramona Tanabe said. “When they’re settled, both sides hire an attorney.”

Peter J. Stavropoulos, president of the Workers Compensation Lawyers Association, said Illinois’ cost of lawyer involvement may be high but it’s low per incident and improving.

“As of 2016, premium per $100.00 of payroll was $2.23 in Illinois, representing the eighth highest state counted,” he said. “Still, that was an improvement from 2014 when Illinois ranked 7th at $2.35.”

State laws that dictate pricing also drive costs higher than other states the Workers Compensation Research Institute track, the report said.

“The higher-than-typical medical prices are largely a result of the fee schedule and higher utilization of services as well,” Tanabe said.

The fee schedule is set in section 8 of the Illinois Workers’ Compensation Act.

Employers in Illinois spent more than $2 on workers’ compensation premiums for every $100 in payroll costs in 2016, according to a report by the Oregon Department of Consumer and Business Services, good for eighth-highest in the nation and tops in the Midwest.

This article was first published by Illinois News Network.

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