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Impact of PTSD on Workers’ Comp Costs

Mental health disorders have emerged as a potentially significant factor in workers’ compensation. This article focuses on potential impacts that post-traumatic stress disorder (PTSD), a mental health condition that some people develop after they experience a shocking, scary, or dangerous event, may have on WC system costs.

In recent years, there has been an increase in legislative activity across the country to broaden or establish eligibility for WC benefits for PTSD. The momentum of such measures has grown, and could be accelerated somewhat, given the spotlight the COVID-19 pandemic has cast on the potential for workers to contract PTSD from their employment—particularly in the healthcare field. In this paper, we review examples of WC benefit eligibility criteria for PTSD, available data and the potential impact of PTSD on overall WC costs, including possible effects stemming from the pandemic and other stressors.

How Do WC Benefit Eligibility Criteria for PTSD Vary by State?

There is much variation in WC benefit eligibility requirements for PTSD between states. The first question we reviewed is whether PTSD—without a corresponding physical injury—is explicitly addressed as being a compensable injury or occupational disease under WC statutes.

  • Statutes may generally address WC for a mental injury or illness in a variety of ways, explicitly exclude mental injuries not accompanied by physical injuries (a mental injury or disability that arises without a physical injury is also known as a “mental-mental” injury) or limit mental-mental injuries to certain situations such as crimes of violence.
  • If PTSD is compensable as a covered injury or occupational disease under a state’s WC statutes, it may be compensable for all occupations or only for some subset of occupations such as “first responders” (e.g., law enforcement officers, firefighters and emergency medical technicians).
  • In the case of first responders, statutes typically reference the PTSD subset of mental injuries.

If a state provides WC benefits for PTSD without a physical injury, what conditions need to be satisfied for it to be a compensable claim?

  • Must the condition result from a specific incident, or can it arise over time as a result of cumulative exposure to several events? (When the condition is brought about by repeated traumatic events, it may also be referred to as continuous traumatic stress disorder, or CTSD.)
  • Must the nature of the traumatic event preceding the PTSD be extraordinary in relation to the average worker’s job experiences, or in relation to other employees in the same occupation?
  • What is the burden of proof required to establish eligibility for WC benefits? For example, must PTSD be proven with clear and convincing evidence or with a preponderance of evidence? Is PTSD associated with a presumption that it arose out of and in the course and scope of employment?
  • What type of healthcare professional may make the diagnosis, and what standards can they use?

Some states have legislative proposals that consider establishing or expanding eligibility for WC benefits resulting from PTSD to first responders or a broader group of occupations. Some others have considered increasing coverage to all occupations under certain conditions. Several states where mental injuries may already be eligible for WC benefits have introduced legislation to provide a presumption that PTSD in first responders occurred in the course of employment.

In jurisdictions where NCCI provides ratemaking services, first responder classes only account for approximately 1.6% of privately insured costs, with most states ranging from 0.5% to 3.0%. Therefore, legislation focusing on first responders may have a relatively small impact on overall privately insured WC costs. But it may have a significant impact for the affected classifications. On the other hand, legislation affecting all classes could have a significant statewide impact.

What WC Data Is Available on PTSD?

WC data on PTSD is limited due to both the relative scarcity of PTSD claim data, in general, and limited data reporting for first responder employer groups. If legislation is enacted making PTSD more readily compensable under WC, the subsequently reported additional data could be used in future PTSD cost impact analyses. Until a significant volume of credible WC PTSD data becomes available, non-WC data may be leveraged.

What Are the Incidence Rates of PTSD?

We can get a general idea of PTSD frequency in the workplace by analyzing incidence rates from published PTSD studies and meta-studies of the general population, first responders, veterans and those in other occupations.

For the general population, a 2016 epidemiological study indicated that 6.1% of American adults experienced PTSD in their lifetime, while 4.7% had it as a condition during the most recent year. The presence of PTSD in the “most recent” year does not indicate when the event or events occurred that led to the condition. So, care must be taken if these prevalence rates are extrapolated to estimate annual WC claim frequency, which is the likelihood that a worker will file a PTSD claim in a particular year and that the claim is accepted.

See also: Workers Comp Trends for Technology in 2021

There have been numerous PTSD studies on first responders. One worldwide meta-analysis estimates a 10% average PTSD rate for first responders overall, where the average rates vary by occupation.

Care is needed when comparing the results of studies that were conducted in varying locations and time periods, and that use differing methods to identify and analyze the incidence of PTSD. Further, it is possible that reported mental illness from traumatic events in the workplace may be increasing relative to levels reflected in past studies.

What About the COVID-19 Pandemic?

While some employees have been working from home, many employees classified as “essential workers” have continued to work at their usual place of employment. This latter group may have faced a higher risk of contracting COVID-19 and possibly experienced more fears and anxiety about becoming infected themselves or infecting their loved ones. In particular, early data suggests that first responders and healthcare workers may have been disproportionately affected by COVID-19—accounting for almost 75% of all COVID-19 claims reported to NCCI as of year-end 2020. Some of these workers have provided direct care to people with the virus, often in overburdened areas. As a result, they may experience significant physical and psychological strain. For example, a sample of 571 frontline workers in the Rocky Mountain region surveyed between April and May 2020 showed 15% to 30% reported traumatic stress.

The myriad of issues faced by first responders and those on the front lines of the pandemic have been well-documented. For example, one writer opines: “Over the last year, there has been the psychological trauma of overworked intensive care doctors forced to ration care, the crushing sense of guilt for nurses who unknowingly infected patients or family members and the struggles of medical personnel who survived COVID-19 but are still hobbled by the fatigue and brain fog that hamper their ability to work.” Extended periods of stressful conditions resulting from the COVID-19 pandemic could mean that these workers may suffer trauma not necessarily from a specific extraordinary event, but perhaps from continuous stress.

Mental health was reported as a significant concern for healthcare workers before the COVID-19 pandemic, and COVID-19 appears to have increased the stress, with 37% reporting “mental health issues” in 2019 versus 41% in 2020. And 58% of healthcare workers say mental health issues have affected their work more since the COVID-19 pandemic began. If any resulting emotional impact persists, it could increase the prevalence of PTSD and CTSD among healthcare workers after the pandemic.

Some other workers, such as nursing home staff, have also disproportionately suffered from COVID-19-related stress. One survey taken between May and June 2020 revealed some of the same adverse conditions for these workers as noted above for healthcare workers.

At this writing, it remains to be seen how COVID-19 will affect the propensity to file PTSD claims in those states that have chosen or will choose to make PTSD or other mental-mental claims eligible for WC benefits.

What About Other Stressors?

The COVID-19 pandemic is an example of a potential large-scale stressor on the WC system because it may contribute to an influx of claims involving not only physical injuries but also mental trauma. However, this is not the only potential source of escalation in mental trauma claims. Other types of events could have similar impacts at a state or local level, such as shootings, natural disasters and domestic terrorism.

Events involving mass injuries or casualties could lead to spikes in reported PTSD cases, which would present a challenge when projecting future PTSD incidence rates.

Understanding How PTSD May Affect WC System Costs

In all situations, one must account for how state law treats physical-mental, mental-physical and mental-mental events when assessing their potential impact on WC system costs.

When analyzing how proposed PTSD legislation may affect a state’s WC system, one must first consider issues related to estimating the number of compensable claims, including:

  • Nuances in current and proposed WC statutes—What are the eligibility requirements, and how are they changing?
  • Studies of PTSD prevalence rates—Are the prevalence rates for the lifetime or a recent period? What were the exact occupations of the participants in these studies? What DSM (American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders) standard was used? Did the study use clinical reporting or self-reporting? If the latter, what cutoff point of scores was used to determine the presence of PTSD? Were the participants selected at random or by convenience? What was the sample size? When was the study conducted? What country did the participants live in?
  • Other factors that might cause actual claim frequency to be different than otherwise expected—Will frequency be lower due to any potential perceived stigma associated with reporting a mental injury claim? Conversely, will frequency be higher if there are financial incentives for being diagnosed with PTSD?

WC benefits available to workers with PTSD may vary significantly by state and by occupation. Considerations when estimating the average WC cost of a PTSD claim include:

  • Types of medical treatment provided—Beyond the cost of counseling sessions and primary care office visits, what medicines may be prescribed to sufferers of PTSD? What health issues may arise directly related to PTSD or related to the treatment provided, such as side effects of prescription drugs? Might there be cases of self-harm?
  • Temporary versus permanent disability—How might healthcare professionals determine when a worker has reached maximum medical improvement? How likely is it that a worker will be found to have a permanent total disability due to PTSD? How will benefits be determined in cases where the worker has a permanent partial disability? How will statutory time limitations affect expected costs?

See also: Addressing PTSD in the Workplace


Mental health conditions in the workplace are receiving greater attention, whether they arise from a single event or continual exposure to an unusually traumatic work environment. Many state legislatures have been considering establishing or expanding the eligibility for WC benefits to those suffering from work-related PTSD. And COVID-19 could intensify this trend.

To gauge the impact of PTSD claims by occupational group and on overall costs, one needs to estimate the number and average cost of such claims. Recognizing the scarcity of WC-specific PTSD claims data, a projection of the potential impact that PTSD claims may have on WC costs may result from analyzing available literature and incorporating key considerations. These considerations include the extrapolation of prevalence rates to estimate annual WC claim frequency and the applicability of historical studies to the current situation, given the locations, time periods and methodologies underlying such studies.

2018 Workers’ Comp Issues to Watch

The first Out Front Ideas with Kimberly and Mark webinar of 2018 provided our thoughts on the 20 Workers’ Compensation Issues to Watch in 2017. What follows is a summary of the issues discussed:


The healthcare industry continues to evolve at a rapid pace, and the evolution is vast, encompassing everything from pharma to practice to technological disruptors.

Consolidation and mergers and acquisitions in the healthcare space will continue in 2018. As CVS looks to broaden with the acquisition of Aetna, do not be surprised if Amazon, Walmart and other large employers expand their reach into health, as well. Health systems have been merging for years. In some of the mergers, we are now beginning to see hospital and facility exits resulting in local disruption for patients, providers, insurers and the benefit and risk programs of those affected. For many years, health plans have been in the business of delivering patient care. Probably the best example is Kaiser Permanente, operating as both a health plan and healthcare provider. Similar to UHG’s announcement of its DaVita acquisition, we will likely see more payer/practice mix in 2018. Drug companies are purchasing other drug companies, and, given their R&D cycles, generic and biosimilar opportunities, we do not anticipate this to decrease.

Under Dr. Scott Gottlieb’s oversight at the FDA, expect to see approval and safety pathways accelerated in 2018, which will enable speed to market for new generic drugs, digital health software and medical devices.

A few additional hot topics will include:

  • Scope-of-practice advancements for physician assistants and nurse practitioners given their underutilization.
  • Competition for convenient, quicker, more-accessible options for care with growing emphasis on community care, home care, retail clinic care and telemedicine.
  • For most medical providers, revenues are flat while expenses continue to rise, prompting significant focus on efficiency. Offices and systems need to improve speed of delivery and agility at all levels.
  • Value-based care models and value-based reimbursements. Examples in workers’ compensation include physician/health system pay for outcomes and bundled payments arrangements. Health plans look at population health outcomes and continue to advance accountable care organization (ACO) models.
  • Pharma continues to aggressively address the need to create value for outcomes related to drug pricing. The debate there continues. How much is a drug worth if it literally saves the life of a patient?

Legislative Watch

Thirty-four of the 50 state governors are currently Republicans. This, combined with the fact that insurance rates are down in most of the U.S., means we have not seen a significant push for workers’ compensation reforms the last few years. However, there are still some states where significant activity is expected in 2018.

  • Florida will again attempt to fix the plaintiff attorney fee caps that were found unconstitutional by the state supreme court two years ago.
  • Pennsylvania had the part of its workers’ compensation statutes dealing with the evaluation of impairment found unconstitutional in 2017. Efforts are underway to correct this legislatively.
  • Expect the workers’ compensation reform battles between Illinois Gov. Rauner and the Democrat-controlled legislature to continue. This is an election year for the Illinois governor.
  • In California, it is Gov. Brown’s last year. Expect yet another push by the legislature to undermine prior workers’ compensation reforms. Universal healthcare will likely be an issue in the 2018 governor’s race, and the outcome of this election could have a significant impact on workers’ compensation in 2019.

Treatment Guidelines and Drug Formularies

We have seen a positive trend in states adopting treatment guidelines and drug formularies, which can help injured workers get proper, timely care and help to reduce unnecessary treatment.

In 2018, California, New York and Arkansas will all be implementing new treatment guidelines or drug formularies. Montana is also implementing a drug formulary, but the timeline for this is not set yet.

Georgia, Pennsylvania, North Carolina and Louisiana all considered either treatment guidelines or drug formularies in 2017, and we expect them to revisit this again in 2018.

See also: The State of Workers’ Compensation  

Judicial Watch

Every year around the country, judges modify the practice of workers’ compensation in their state based on their interpretation of the statutes. These interpretations can significantly expand or restrict workers’ compensation benefits in the state. It is as important to monitor the court decisions in your state as it is to monitor legislative activity.

Along those lines, challenging the constitutionality of workers’ compensation statutes is a trend that is expected to continue in 2018. Last year, Pennsylvania joined the list of states to have a portion of their workers’ compensation statutes found unconstitutional by the state supreme court. There is a case on appeal in Kansas right now challenging the constitutionality of a portion of their statute, as well. The basis for these constitutional challenges exists in many other states.

Finally, last year, a judge in Alabama declared the state’s entire workers’ compensation statutes unconstitutional. This was appealed, and the case settled on appeal, so that decision ultimately was rendered moot. However, the issues raised in that court case regarding benefit adequacy are something we could see again anywhere.

Workplace Violence

Companies are working to raise awareness of workplace violence. Whether they are engaging consultants to assist with planning or conducting revised employee training, risk managers and human resources are working together to ensure they have a solid program in place. There is an uptick in patient attacks on healthcare workers. This is happening all too often, ranging from emergency room to mental health facilities and nursing home care settings.

Given that 2017 marks an unprecedented awareness of sexual harassment in the workplace, we are adding workplace harassment as an issue to watch. Employers small and large are looking at their sexual harassment policies, training and complaint-investigation processes.

State Variations

Workers’ compensation is a state-based system, and the variation between the states is something that has been attracting consistent attention. Two people performing the same job for the same company in different states can receive significantly different workers’ compensation benefits. The very definition of an employee varies by state. From the administrative side, a lack of consistency with regard to state forms, data templates and even the definition of disability is very challenging to payers.

The U.S. Department of Labor started looking into these issues in late 2016, but those efforts stopped after the election of President Trump. However, those issues are still very real and need to be addressed. Now is probably the best time to establish standards between state workers’ compensation systems – now, when the federal government is not pushing for it. If no action is taken, it is likely that the federal government will push for this in the future.

Pain Management

Everyone is keenly aware of the opioid crisis and the importance of tapering narcotics, narcotics avoidance, formularies and deaths related to opioids. 2018 provides the opportunity to advance our understanding of these issues and willingness to change treatment protocols for patients in pre-pain, acute pain and chronic pain states. With pain, one size does not fit all. Personalization of care and working in partnership with the patient, the family or support system and providers to collectively create a treatment pathway for the patient is important to ensure success.

Natural Disasters

2017 was an unprecedented year for natural disasters in the U.S., with multiple major hurricanes and widespread wildfires. Natural disasters can have a big impact on workers’ compensation and healthcare systems, including the risks faced by first responders, the disruption to your workforce, challenges to the benefit delivery system and supply chain disruption.


Every company has cyber risks and preparedness, and recovery is a daily priority for the CIO. Cyber risk reaches beyond hacking and selling personal identifiable information on the deep dark web. It can be a life and death concern. Health systems locally and worldwide were hit with ransomware in 2017, shutting down hospital and practice computer systems while money was demanded in exchange for digital keys to unlock the systems. Patient data hacks have resulted in medical device malfunctions and treatment delays. A recent cyber attack on Merck hurt its ability to produce medicines. Workers’ compensation payers, service providers and stakeholders are equally at risk. History shows that companies without a solid cyber insurance program put their business at risk. Companies and customers will place even greater emphasis on cyber risks in 2018

Rate Adequacy

For the last few years, workers’ compensation rates around the country have been flat to down in most states. This is in spite of the fact that NCCI data shows that, over the last 20 years, the average medical and indemnity costs per lost time claim have increased at rates greater than inflation.

In 2017, two of the top 10 writers of workers’ compensation posted multimillion-dollar reserve increases to cover their developing losses. This attracted the attention of rating agencies such as A.M. Best, which, in a September report, raised concern about the threat of inflation on workers’ compensation tail costs and the impact this could have on industry reserves.

Multiple brokers have indicated that the workers’ compensation rate outlook for 2018 is relatively flat. But with workers’ compensation being such a long-tail business, premiums collected today must cover losses 30 years into the future. As losses continue to climb, it is inevitable that insurance rates will need to increase in the future to offset those losses.

Job Accommodation

Silos within companies result in multiple return-to-work policies, both formal and informal. Return to work is not a workers’ compensation issue, alone. The issue is inconsistent with job accommodations across organizations. Whether an employee is injured on the job, requests an accommodation as part of a disability or leave of absence or has the need for an accommodation in general does not alter the way in which an accommodation is handled. In 2018, we encourage you to break down the RTW silos and get comfortable outside your typical area of responsibility. We should not only meet ADA requirements but also provide employees the accommodations they deserve.

Impaired Workforce

2018 means that recreational marijuana is now legal in more states than ever before, with California becoming the largest state to allow use.

However, the reality of recreational marijuana is that this likely means that a percentage of your workforce is impaired on the job. Many employers stopped pre-employment drug testing for marijuana because too many potential workers failed the drug test and because the presence of marijuana in your system does not mean you are currently impaired. That’s the problem. Right now, there is no reliable method for employers to determine if their employees are impaired on the job. There is no “marijuana breathalyzer” that can quickly and accurately show whether a person is impaired. The bottom line is that the science of marijuana has not caught up with the social realities of marijuana.

What can employers do? Courts have consistently ruled that employers with drug-free workplace policies can terminate an employee who tests positive for marijuana, even if the employee is using medical marijuana. There is one notable exception. Last year, a Maryland court allowed an employee to pursue a wrongful termination claim under these circumstances. Will other states follow the Maryland precedent or the cases in California, Colorado, Michigan and other states where the termination was allowed?

In addition, what happens now that the Department of Justice has rescinded the Obama administration policy memo that indicated the federal government would defer to the states to enforce marijuana laws? Does this mean the federal government will start to arrest marijuana users and producers? No one knows for certain. Perhaps this will force Congress to take action on marijuana.

Digital Health

Digital health is a broad term related to the use of technology and health. Examples include mobile health apps, telemedicine products, tools to track consumer/patient data, education and patient reminder programs and treatment adherence. For those working in the digital health space, connectivity is the issue. There are plenty of technology solutions; the issue is how to connect all the stakeholders: patients, doctors and service providers, pharmacists and payers. Without connectivity, silos remain, and the system is too clunky to be effective.

Probably the most common digital health discussion in workers’ comp is telehealth. We have been slow to adopt comprehensive programs, whereas the benefits space has been at it for more than five years. Group health has moved past triage of physical symptoms to treating mental health and, in 2018, moving into chronic disease management. Look for more hospitals to offer telehealth services as they diversify care offerings and seek to enhance their offerings. Technology has improved, and consumer awareness and interest is growing, so now is the time for workers’ comp to jump on board.


Under the Obama administration, OSHA had a publicly stated policy of “shaming” employers in compliance. That meant frequent press releases highlighting violations, even if those violations were later rescinded. In 2016, there were more than 200 OSHA press releases on enforcement actions.

OSHA under President Trump has been much more focused on education than penalties. As of late October, the administration had issued less than 20 press releases on enforcement actions. Scott Mungo, who worked for FedEx Ground, was nominated by President Trump to head OSHA in October. In December, his nomination was approved by the Senate committee, and it is expected he will be confirmed by the full Senate soon.

What should we expect from OSHA under President Trump? If the first year of his term is any indication, we will see fewer new regulations and perhaps even a rollback of some existing regulations. The approach has been more consultative with employers, rather than combative.

Workforce Wellbeing

Human resources, risk managers and executive leaders recognize that workforce wellbeing affects both top and bottom line performance of an organization. Benefits are a talent attraction and retention tool in 2018, and human resource officers are deploying programs to address physical, emotional and financial wellness – the three pillars of health. Wellbeing programs place emphasis on an individual’s personal needs and considerations for both health and productivity. Workplace wellbeing programs in 2018 expand far beyond weight loss and smoking cessation. They may also include financial planning tools, resilience and mental health awareness training. To promote use of benefits, human resources departments need to break down the benefit silos. The whole health model at Sedgwick health is a great example, because it integrates group health, leave of absence, workers’ compensation, short-term disability and job accommodations. Benefit integration and ease of use drives engagement, which, in turn, improves business performance.


When you hear about workers’ compensation fraud, the first thing that comes to mind is videos showing allegedly disabled workers engaged in a variety of physical activities they claim to be unable to do. While these videos are sensational, the reality is that true fraud from injured workers is rare.

The most common source of workers’ compensation fraud comes from employers in the form of premium fraud. Underreporting payroll, misclassifying workers and incorrectly classifying workers as independent contractors is something that happens all too often. Employers that commit workers’ compensation fraud drive higher premiums for honest employers and create an unfair competitive business environment. The construction and staffing industries have been dealing with this issue for many years. Many states have been aggressively cracking down on this type of fraud, but it continues to be a significant problem.

See also: 25 Axioms Of Medical Care In The Workers Compensation System  

Medical provider fraud is another area of workers’ compensation fraud getting more attention lately. In the last two years, we have seen several high-profile prosecutions of medical providers in California. The fraudulent treatment alleged in these cases amounts to billions of dollars. We have not seen medical fraud like this in other states, in part because California’s system has a high percentage of post-injury CT claims, which allows unauthorized treatment and the filing of a lien by the medical provider. These elements create an environment that is ripe for fraud and abuse. We hope that we will not see this fraudulent behavior spread to other states and that California will continue its diligent prosecution of these cases.

Consumer Experience and Engagement

We are living in a consumer’s world today. The pace with which we want our services delivered and the high standard of excellence expected has led all sectors in business, including health and workers’ compensation, to consider their definition of consumer. Failure to engage a consumer leads to complaints and negative PR and possibly lack of treatment adherence, whereas high levels of consumer experience lead to positive outcomes. You will hear more about use of net promoter score (NPS) to understand consumer experience and link to engagement in 2018, and we believe use of NPS has potential in workers’ compensation. Now is the time to engage consumers in the conversation around our products, services and certainly program design. The injured worker’s voice is often missing in the workers’ compensation system.

People, Places and Things

The aging workforce, the evolving workforce and technology are all having a significant impact on the workers’ compensation industry. In the coming years, we will see a significant exodus of talent from our industry due to retirement. How do we attract the next generation and compete against other industries for people? What will the office of the future look like? How will changes in technology affect the way we do our jobs, including how we communicate with injured workers?


If you have not checked out the latest conversations in insurtech, 2018 is the time. The market has grown considerably in the last three years with a worldwide platform. What’s insurtech? Insurtech is use of technology to bring efficiencies to the insurance industry. Those engaged with insurtech believe new tech players will disrupt the current insurance market by bringing coverage to a digitally savvy customer base. Customer expectations of seamless, instant transactions are increasingly the norm, and insurtech use of blockchain and AI are promising – although yet to be proven in most scenarios. Much of the focus of insurtech is on personal lines, but it is starting to move into commercial segments. McKinsey reported last year that 46% of insurtech companies are focused on property and casualty, 33% on health and the remainder on life. They target primarily pure risk insurance, where they have developed access points to the value chain on innovations.

Immigration Reform

Finally, immigration reform is something that has been talked about politically for years, but Congress has not been able to advance any meaningful discussions in this area. Will that change in 2018? Our country and Congress appear deeply divided on this very important issue. The outcomes of these discussions could have a significant impact on the millions of undocumented immigrants currently working in this country without the benefit of workers’ compensation coverage or other workplace rules and regulations.

To listen to the complete webinar, click on this link.

Return to Work Remains a Problem

According to one published report, (WorkCompCentral, March 4, 2016, “$100 Million in Workers Benefits Sits Unused”), only 3,955 checks have been issued to injured workers from the Return to Work (RTW) Fund established in Senate Bill 863. The checks total slightly less than $20 million, leaving an additional $100 million untapped by injured workers. According to regulations of the Department of Industrial Relations (DIR) that administers the fund, workers receive a $5,000 allowance if they have been issued a Supplemental Job Displacement Benefit (SJDB – commonly referred to as a “voucher”). The voucher is issued if the employer at injury fails to make a qualifying offer of employment to the worker.

While the provenance of the RTW Fund has been criticized – largely by those not in the room to witness its birth – there are more fundamental issues with the fund and its administration. First, the RTW Fund really has nothing to do with return to work.

It can be fairly assumed that the use of that particular section of the Labor Code – Section 139.48 – was a legal accommodation because there was existing statutory reference to the RTW Fund in Labor Code Section 62.5 – specifically Sec. 62.5(a)(1)(B). Section 62.5 is the Workers’ Compensation Administration Revolving Fund statute. That reference, in turn, was to the RTW Program that was originally created more than 15 years ago in Assembly Bill 749 as a mechanism to partially subsidize certain employers who brought injured workers back to work. The employer subsidy as originally enacted was for wages and worksite modifications. Later, Senate Bill 899 further revised the RTW Program to limit the reimbursement to worksite modifications and to expend funds on an “as available” basis. The RTW Program sunset on January 1, 2010, but while Labor Code Sec. 139.48 was taken out of the code, the reference to the RTW Fund in Sec. 62.5 remained.

See Also: A Physician’s View of ‘Return to Work’

Once one gets past the title of “Return-to-Work Program,” however, there is no evidence to suggest that Sec. 139.48 has anything to do with returning a worker to employment with the employer at injury – or anyone else for that matter:

“139.48. (a) There is in the department a return-to- work program administered by the director, funded by one hundred twenty million dollars ($120,000,000) annually derived from non-General Funds of the Workers’ Compensation Administration Revolving Fund, for the purpose of making supplemental payments to workers whose permanent disability benefits are disproportionately low in comparison to their earnings loss. Moneys shall remain available for use by the return-to-work program without respect to the fiscal year.

“(b) Eligibility for payments and the amount of payments shall be determined by regulations adopted by the director, based on findings from studies conducted by the director in consultation with the Commission on Health and Safety and Workers’ Compensation. Determinations of the director shall be subject to review at the trial level of the appeals board upon the same grounds as prescribed for petitions for reconsideration.

“(c) This section shall apply only to injuries sustained on or after January 1, 2013.”

The history of Labor Code Sec. 139.48 is also influenced by the Commission on Health & Safety & Workers’ Compensation (CHSWC) publication, “Report on the Return-To-Work Program Established in Labor Code Section 139.48” (2009). The most telling aspect of that report was the “alternative” recommendation to the Legislature: “California may wish to consider eliminating the program. California may wish to consider a program that more directly assists injured workers who are unable to return to their previous jobs.” (p.7) Given that the program sunsetted roughly eight months later, the commission’s recommendation is almost prophetic.

Three years later, as required by SB 863, the DIR conducted an independent study to determine how best to structure the RTW Fund in the new and improved Labor Code Sec. 139.48. That responsibility fell upon the ubiquitous RAND Corporation, whose 2014 report, “Identifying Permanently Disabled Workers with Disproportionate Earnings Losses for Supplemental Payments” is the foundation for the current RTW program. Among its recommendations were to make eligibility for the program dependent on receiving a voucher. According to RAND, approximately 20% of injured workers receiving permanent disability benefits receive a voucher. (p. 12) Under RAND’s scenarios, and anticipating utilization of the RTW fund at the same approximate levels as the vocational rehabilitation program repealed in 2004 by Assembly Bill 227 rather than their observed voucher utilization figures, RAND estimated roughly 24,000 injured workers would access the RTW Fund, thus resulting in about $5,000 per recipient to exhaust the $120 million annual assessment.

So while that explains where we are today, it also raises questions about whether the current RTW program suffers from the same lack of awareness that caused its statutory predecessors to go quietly away. But that also raises the bigger issue: What has happened to re- employment as an objective of the system over the past 20 years?

The history of vocational rehabilitation in California’s workers’ compensation is a long one – culminating in the repeal of the mandatory vocational rehabilitation program in AB 227 and the repeal of vocational rehabilitation as a compensable benefit with the amendment to Labor Code Sec. 3207 in SB 899. Legislative efforts trying to suggest that return to work is still important in the workers’ compensation system have largely been limited to the voucher, an at-best-meager program that is intended to try to put the injured worker on the path toward gaining skills to find new employment. In no way, however, is it as robust as the former vocational rehabilitation program. It is, regrettably, a $6,000 check, with some restrictions, that is intended to finalize the severing of the tie between an injured worker and the employer at injury.

See also: Return to Work Decisions on a Worker’s Comp Claim  

To paraphrase Will Turner in Pirates of the Caribbean, “That’s not good enough!”

As we move forward and discuss a whole host of issues in the workers’ compensation system, such as utilization review, the use and abuse of opioids, prescription drug formularies, independent medical review and permanent disability ratings, perhaps someone, somewhere, likely in either Oakland or Sacramento, should talk about re-employment of disabled workers.

Not some resurrection of vocational rehabilitation and what became its abuses but, rather, simply how to help workers unemployed due to a disabling injury at work to have the same access to re-employment assistance as disabled or otherwise unemployed workers whose access to re-employment assistance is defined by multiple state and federal programs and not by extracting some form of payment from the employer at injury.

There is no shortage of programs that could provide such assistance. And perceived unintended consequences that expanding the scope of re- employment assistance beyond the employer at injury would increase the number of workers unemployed after a workplace injury are unlikely given the protections of the Fair Employment and Housing Act (FEHA), the Americans with Disability Act (ADA) and Labor Code Sec. 132a.

According to the Workers Compensation Insurance Rating Bureau (WCIRB), in calendar year 2014 roughly $29 million was spent on vouchers. Labor Code Sec. 139.48 assesses $120 million annually. One should ask whether that money would be better spent providing access and coordination to the host of re-employment programs offered by the Department of Rehabilitation, the Employment Development Department (CalJOBS), non-profit private companies, such as Goodwill Industries, that offer re-employment assistance, and a host of federal programs, including those offered from the U.S. Department of Labor, Office of Disability Employment Policy and the Social Security Administration’s Plan To Achieve Self-Support (PASS).

In today’s complex world we simply cannot expect the employer at injury – especially the small to medium-sized employer – to provide all the resources necessary to facilitate meaningful re-employment for injured workers who are permanently disabled. Expanding the concept of re-employment and coordinating programs designed to create jobs for the disabled is a logical step forward to address this problem. No amount of vouchers or RTW fund disbursements will ever be a viable substitute for a job.

The sooner we realize this and look to Sacramento and Washington to break down the barriers created by the workers’ compensation system to full access to re- employment resources for disabled workers, the better.


Work Comp’s Future Is Not What You Think

Employment drives workers’ comp. More specifically: payroll, industry type and claim frequency.

Employment is the end-all, be-all of workers’ comp — for premiums and policies on the front end and for getting workers’ comp patients back to work when claims do happen.

So when a whole lot of jobs in a bunch of industries appear to be disappearing, we workers’ comp folks need to take notice.

If you insure, manage claims for, provide services to or otherwise work in the transportation/logistics industry, you’d best be watching developments in Pittsburgh and keeping your eye on Otto, the self-driving-truck company that Uber just bought for $680 million.

See also: States of Confusion: Workers Comp Extraterritorial Issues 

Uber is experimenting with self-driving cars in the Steel City, a big step on the way to fully automated driverless cars.


Ford is heavily involved and plans to have a self-driving car on the market in five years. Sign me up! As someone who spends way too much time behind the wheel, I’m all over this. Work, read, etc. while being transported to client meetings? Heck, yes!

The giant ride-sharing company is also behind Otto, an effort to automate long-haul trucking.

Photo below from the SF Chronicle//Testing of a Volvo truck by engineer Nic Munley.


Unlike competitor Lyft, Uber doesn’t seem to care that its current drivers are going to be left ride-less in the not-too-distant future, nor is Uber bothered that, if when Otto and its lookalikes are successful in removing drivers from trucks, those 900,000 truck drivers will not have jobs.

And without truck drivers, truck stops won’t be selling much food or other necessities. Motels won’t be providing showers or rooms. Body shops won’t be needed as much, either.

Uber contends that the 24/7 usage of driverless vehicles will mean more jobs for mechanics, but that’s speculative, at best. In fact, as these vehicles will just be replacing miles driven by vehicles currently piloted by people and not adding more vehicle miles, I don’t see why any more mechanics will be needed. Actually, less maintenance may be the norm because of constant monitoring of vehicle systems.

See also: 25 Axioms Of Medical Care In The Workers Compensation System  


  • fewer truck drivers
  • fewer support staffs
  • fewer jobs in service stations and motels
  • fewer “taxi-type” drivers
  • fewer accidents –> less work for body shops, less demand for auto parts and paint and less need for auto claims adjusters

For workers’ comp…

  • much lower premium volume
  • far fewer claims to service
  • far fewer jobs to return injured drivers to
  • possibly more claims in the near future as drivers see the writing on the wall

Are Workers’ Comp Systems Broken?

As national conversations occur about the direction of workers’ compensation (WC) systems, I sometimes hear comments that “WC systems are broken.” Rarely are public programs either all black or all white. The material below summarizes relevant information from a variety of published Workers Compensation Research Institute (WCRI) studies about how most workers fare in WC systems. How workers fare is critical to assessing the performance of WC systems, and the effectiveness of these systems affects the competitiveness of American business.

See also: States of Confusion: Workers Comp Extraterritorial Issues

The data from WCRI illustrates that the majority of workers in the workers’ compensation system:

  • Return to work within a few weeks of the injury, typically to their pre-injury employers at the same jobs and pay as before the injury
  • Receive their first income benefit payment in 30 days or less from the time that the payer is notified of the claim
  • Report that they were satisfied with the overall medical care received, including the time it took to have the first non-emergency visit with a provider and access to the desired medical services

See also: Return to Work Decisions on a Worker’s Comp Claim

Here is more detail:

Return to work and recovery of earnings capacity

The overwhelming majority of injured workers return to work and do so to their pre-injury employer at the same or higher pay:

  • 75% to 85% of workers had less than one week of lost time[1]
  • 80% to 90% of workers had four weeks of lost time or less[2]
  • 85% to 95% of workers had six weeks or less of lost time[3]
  • Only 5% to 10% said they earned a lot less when they first returned to work (for those who returned to work)[4]
  • 87% to 95% said they returned to their pre-injury employer[5]
  • Half of those changing employers reported that the change was not due to the injury[6]

Timely payment

Most workers receive their first indemnity payment without dispute or substantial delay:[7]

  • 40% to 50% in 14 days or less from the time payer was notified of injury
  • 60% to 75% in 30 days or less

Satisfaction and access to medical care

By an overwhelming majority, most workers were satisfied with medical care received (workers with more than seven days of lost time):

  • 75% to 85% reported somewhat or very satisfied[8]
  • 85% to 90% reported no problems or small problems getting desired care[9]
  • 80% to 90% reported being somewhat or very satisfied with the time it took to have the first nonemergency care[10]

While the systems may serve most workers reasonably well, the data also shows that there are injured workers with certain attributes that make them less likely to receive these good outcomes. Discussions that focus on system changes that improve outcomes for these injured workers have high-impact potential. A subsequent post will highlight the evidence on who these workers are.