Severity of Injury, Not Legal Fees, Drives Cost of Workers' Compensation

December 4, 2009

( -- The severity of injury and level of impairment -- not the workers' legal fees -- have the most effect on payout for workers' compensation claims among Illinois construction workers, researchers at the University of Illinois at Chicago School of Public Health have found.

The research is published in the November issue of the .

The study uses workers' compensation data to quantify the actual amount of money spent on claims. Previous studies, based on comprehensive cost estimates, have pegged this figure as high as $12.7 billion dollars per year for the entire U.S.

The researchers identified specific factors associated with cost, such as age at the time of accident, weekly wage, fatality, attorney representation, number of body parts injured, and the severity of injury. Demographic data was also obtained for filing claims, including sex, marital status, number of dependents, and place of the accident.

The study evaluated 19,734 claims filed with the Illinois Workers' Compensation Commission between 2000 and 2005. Such claims are filed when an employee and employer are unable to resolve compensation for an injury independently.

The cumulative cost of these claims was more than $580 million, but true direct costs are likely much higher, according to the study authors, because the commission's data do not include external settlements made directly to workers from an employer or insurer.

The researchers found that the number of construction injury claims declined between 2000 and 2005, but the median compensation for an injured worker increased.

The overall rate of construction claims per 100 Illinois construction workers was 1.21, the study found. The median cost of a construction claim was $16,705.

Construction workers filing a claim with attorney representation received $1,210 more in compensation than those representing themselves, after controlling for all other variables in the analysis.

"Before throwing in measures of severity -- which in this study was percent of disability -- attorney costs were about $10,000 per worker. Once we controlled for severity of injury, it dropped to $1,200," said Lee Friedman, assistant research professor of environmental and occupational health sciences at UIC and lead author of the study. This finding is contrary to previous study models, which concluded that attorney fees significantly increase the cost of workers' compensation.

"The discussion that workers retaining attorneys are driving up costs always surprises me," said Friedman. "There has never been a discussion about employers retaining attorneys, which they almost always do. The discourse has always been one-sided."

The study also found that injuries to the extremities (58 percent) and back or spine (20.5 percent) were the most common. Workers who suffered back and spine injuries received higher compensation than workers who injured other body parts.

Friedman's co-author is Linda Forst, professor of environmental and occupational health sciences in the UIC School of Public Health.

The study was funded by the Center to Protect Workers' Rights and the National Institute for Occupational Safety and Health.

UIC ranks among the nation's leading research universities and is Chicago's largest university with 26,000 students, 12,000 faculty and staff, 15 colleges and the state's major public medical center. A hallmark of the campus is the Great Cities Commitment, through which UIC faculty, students and staff engage with community, corporate, foundation and government partners in hundreds of programs to improve the quality of life in metropolitan areas around the world.

Provided by University of Illinois at Chicago (news : web)

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