Rate of first indemnity payment at 21 days higher in Minnesota than most states

Steve Sviggum, commissioner at the Minnesota Department of Labor and Industry, said he was pleased that the study showed Minnesota’s workers’ compensation system “is not out of control” but he added that it could be improved.

Sviggum credited Minnesotans’ work ethic as well as the informal dispute-resolution process, which is “less litigous” than systems in other states, with contributing to Minnesota’s lower overall costs.

Sviggum cited his top priorities for improving the system as controlling the growth of both health care and rehabilitation costs and simplifying the “cumbersome dispute resolution system.” He noted that the Workers Compensation Advisory Committee is making recommendations to state Legislature to improve Minnesota’s workers’ compensation dispute resolution system. The recommendations are modeled on the process used by the unionized construction trades workers compensation system, which is separate from the state administered system, Sviggum said.

Workers’ compensation cost comparisons can be one important factor, not just for current employers but as a selling point for the state to encourage location or expansion decisions within Minnesota. Total costs include wage replacement, medical and rehabilitation expenses and administrative costs. Wage replacement is defined by state statute and ranges from a minimum of $130 to a maximum of $850 per week in Minnesota.

Other study findings about Minnesota’s workers’ compensation experience include:

• The average length of time off – 14 weeks — was nearly three weeks shorter than in the median.
• Claims with more than seven days of lost time were 14 percent lower than the median.
• Fewer workers were off work for at least one week – 17 percent compared to 19.5 percent median.
• More Minnesota claimants, nearly 17 percent, used vocational rehabilitation services, compared to 3 percent of claimants with more than seven days of lost time in the typical study state. Minnesota also paid out the highest amount for these services, but that may be due to how these expenses are recorded in other states, according to the study authors.
• Defense attorney payments in Minnesota were among the highest of the 15 study states, although defense attorneys were involved in significantly fewer cases than typical. The higher defense attorney payments per claim “likely reflect the complex informal dispute resolution system in Minnesota…which likely requires more defense attorney hours,” the study authors observed.

The authors said the 15 states were chosen for the study because of they present a wide range of industries and variety of benefit and cost structures which are representative of the entire country. They also comprise a significant portion of the U.S. population, he said. The study, “Benchmarks for Minnesota, CompScope10^th Edition,” drew on over 27 million claims across 15 states and includes 56 percent of claims filed in Minnesota in 2007-2008.

WCRI describes itself as a nonpartisan, not-for-profit membership organization conducting public policy research on workers’ compensation, health care and disability issues. According WCRI executive director Richard Victor, the insurance industry makes up the largest portion of its membership which also includes employers, governmental entities and insurance regulators in the United States, Canada, Australia and New Zealand, as well as several state labor organizations.

Cost per claim in Minnesota 30% lower than 15-state median