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What is clear is that benefits for injured workers -- especially the most severely injured -- have fallen sharply due to changes to the system for evaluating the severity of workplace injuries.

The study, Workers' compensation reform and return to work: the California experience, was done by the RAND Center for Health and Safety in the Workplace for the California Commission on Health and Safety and Workers' Compensation.

"Benefits have clearly fallen, but it's a tough time to be putting up proposals that might raise employer costs," said Seth A. Seabury, a RAND economist and one of the seven authors of the study. "At the same time, injured workers might need the benefits more, given the economic conditions. So it's certainly a challenging issue."

With improved return to work for injured workers a key goal to lowering earnings losses and reducing employer costs, the authors examined possible explanations for the return-to-work improvements. They said return-to-work rates improved significantly between 2002 and 2005, especially for the most severely injured workers.

The authors say it's difficult to pinpoint what exactly led to the improved return-to-work rates although they noted that costs to employers were generally cited as a key driver in return-to-work decisions. It appears the return-to-work rates were improving before the S.B. 899 reforms were enacted, as evidenced by the fact that workers injured in 2003 and 2003 were not eligible for the tiered benefit provision.

The tiered benefit reduces or increases the amount paid to injured workers by 15 percent, depending on whether the employer makes a qualified offer of return to work. "That gives employers incentives to get employees back to work," Seabury said.

Among the factors that may have influenced return-to-work rates before the reforms were enacted were changes made to the Fair Employment and Housing Act in California. The act covers disabled workers with occupational and nonoccupational injuries.

"Our understanding is that complying with FEHA involves communication between the employer and injured worker at an early stage," Seabury said. "To the extent that the employer is communicating at an earlier stage that might help spur return to work."

Seabury said the penalties for noncompliance with FEHA could also prompt employers to improve their return-to-work efforts. "These are civil tort cases, so there could be more incentives for employers. They might face litigation if they fail to comply."

The study suggests there are still areas where the state could improve its return-to-work efforts. One example is to make better use of the workplace modification subsidy program, which provided money to small employers for modifications to the work site. However, the study says there was a lack of awareness of the program among small businesses.

Overall, the authors say policymakers need to continue monitoring the system to see "if we can do better in return to work and don't lose the gains that we did witness," Seabury said.

Read more at the WorkersComp Forum homepage.

February 24, 2011

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