by Jennifer M. Smith, Esq.

A recent article in Business Insurance discusses a dispute regarding a study from the University of California Davis examining the costs of work place injuries. According to the study, nearly 80% of direct and indirect costs that could be covered by workers’ compensation insurance are being paid instead by private health plans, government insurance companies or by the injured workers themselves. The study suggests that one of the primary reasons for this cost shifting is due to under-reported work comp claims, primarily because employees do not want the negative image associated with work comp claims or face penalties for safety hazards. Leading work comp experts contend the study is not accurate and in fact, work comp insurance often covers costs for treatment unrelated to work injuries, including fraudulent claims. They also contend the reason that the number of claims are down is because workplaces have become safer over time.

In arriving at the 80% figure, the study included non-medical costs including fringe benefits and personal productivity. The article quoted Robert Hartwig, president of the Insurance Information Institute Inc of New York, who states that the workers’ compensation system “was never meant to be a form of business interruption insurance, which is what’s being proposed here.”

The study indicates that the result of other payers covering the costs of work comp injuries is artificially low workers’ compensation premiums for employers. On the flip side, critics of the study also point to data from the U.S. Bureau of Labor Statistics which show a decrease in injury rates because workplaces are safer. Specifically, the incident rate for private sector worker injuries was 3.5 for every 100 workers in 2010, down from 6.1 incidents for every 100 workers in 2000.

For Georgia, the incident rate was 3.1 for every 100 workers in 2010, according to the U. S. Bureau of Labor Statistics at https://www.bls.gov/iif/oshwc/osh/os/pr106ga.pdf.