Academic journal article Journal of Risk and Insurance

Permanent Partial Disability Awards and Wage Loss

Academic journal article Journal of Risk and Insurance

Permanent Partial Disability Awards and Wage Loss

Article excerpt

ABSTRACT

Physicians handling workers compensation cases serve in a dual capacity not required of physicians treating non-workers compensation cases. Not only are they are asked to treat the workers' injuries and disability symptoms, but they are also frequently asked to evaluate the extent of economic damage done to a worker via the assignment of an impairment rating to certain types of injuries. Although physicians are trained to treat traumatic injuries as well as the symptoms of cumulative trauma processes, they generally receive no training in disability evaluation. The authors examine physicians' ability to carry out their latter, "lost earnings capacity" assessment, role. Their multivariate regressions indicate that physicians' impairment ratings are poor guides to subsequent wage loss; impairment ratings explain no more than one-half of 1 percent of subsequent wage loss.

PERMANENT PARTIAL INJURIES IN MINNESOTA

Workers' compensation insurance pays both healthcare benefits and disability benefits to workers injured on the job. Physicians handling workers' compensation cases serve in a dual capacity not required of physicians treating non-workers' compensation cases. Not only are they asked to treat the workers' injuries and disability symptoms, but they are also frequently asked to evaluate the extent of economic damage done to a worker via the assignment of an impairment rating to certain types of injuries. Although physicians are trained to treat traumatic injuries as well as the symptoms of cumulative trauma processes, they generally receive no training in disability evaluation. In many states, such as Minnesota, physicians use guidelines to determine an impairment rating that is frequently taken as a proxy for potential wage loss.

Generally the doctor giving the worker a rating is necessarily going beyond his medical training--i.e., the doctor is "out of school"--when making the assessment of damage sustained by the "out-of-work" injured employee. This article addresses whether impairment ratings assessed by physicians are a good guide of lost wages; namely, is a doctor's medical training helpful in assessing economic damage sustained by a claimant?

Following an injury on the job, all workers with lost-time claims (including the most severely injured) initially receive temporary total disability pay to partially compensate for lost wages after a short waiting period. These benefits generally continue until they return to work or, for the severely injured, until the worker's medical condition has stabilized at what is known as the point of maximal medical improvement (MMI). At the point of MMI, workers with residual medical impairments are divided into two groups: those whose injuries preclude any gainful employment are classified as permanent total claims, while those whose injuries allow them to return to work are classified as permanent partial disability claims. [1] Permanent total disabilities are relatively rare, accounting for only about .3 percent of all national worker compensation claims receiving some type of disability pay, but because of their severity, permanent total disabilities account for about 6 percent of total system costs. Permanent partial disabilities, on the other hand, account for 23 percent of national disability claims and 63 percent of total claim costs (Appel and Borba, 1988, p. 4).

Nineteen states, including Minnesota, from which the authors' sample was drawn, use an impairment rating approach to help determine benefits. [2] The impairment rating approach to compensating permanent partial injuries is based on the physical or mental impairment of the claimant at the point of maximum medical improvement. The impairment assessment is generally expressed as a percentage that indicates the extent to which the injury limits motion, sensory perceptions, or physiological function. The assessment is made without regard to the claimant's vocation, age, or skill level. …

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