A question raised in a Disability Management class [ Workplace Insurance and Benefits (WHDM 408) PCU-WHS] sparked a lively discussion:
“Why doesn’t every work-related injury result in an accepted workers’
compensation claim?”
Students suggested many explanations—employer resistance, worker
fear of reprisal, complex procedures, limited benefits, and cultural attitudes
among them.
These are all valid causes, but to answer the question
properly, we first need to step back and consider how a worker’s work-related
injury case becomes an accepted claim.
With that foundation, we can examine attrition—the progressive
loss of cases at specific points in the pathway from work-related injury to
accepted workers’ compensation claim—and begin to examine root causes.
The Social Policy Intent and Public Policy Implementation
As a society, we want safety, health and security for
workers. When a worker is harmed because
of their work, they should receive medical care, rehabilitation, and income
replacement as well as assistance in returning to work.
The social policy intent is implemented through the
selection of a workers’ compensation model and enacted through public policy
legislation. The US, Australia and Canada have enacted workers’ compensation
schemes primarily at the state/provincial level to fulfill that intent. The choice of a Bismarckian model has
implications for the structure and funding of the workers’ compensation system
in each jurisdiction as we will explore in the next post in this series.
Implementation is focused on the broad parameters of who and
what is covered. Administration, oversight,
and delivery—the “how” mechanism of public policy implantation can vary widely
among jurisdictions based on the same model.
Workers’ compensation
“Workers’ compensation is simple. Workers get harmed at
work, we pay for their care, cover their lost wages, and help them return to
work. What’s complicated about that?”
That comment from a newly appointed workers’ comp executive,
while succinct, is overly reductive. That said, it reflects the straight-forward
public expectation of workers’ compensation systems. It glosses over the complexities from funding
the system to administering cases that may have needs that last a lifetime.
Medical care, rehabilitation and income replacement don’t
come cheap. The workers’ compensation
approach adopted in North America and Australia make the industries giving rise
to those costs responsible for them through premiums or assessments. By making these costs part of the cost of
production, workers’ compensation prevents externalization to others
(especially taxpayers), and encourages safety (fewer, less severe injuries mean
lower costs).
Many workers with work-related injuries do experience the
more-or-less straightforward pathway from work-related injury to accepted
workers’ compensation claim. However,
many others depart from this pathway due to factors that prevent the harm from
ever becoming a recognized or accepted workers’ compensation claim. That attrition is the focus of this series.
Why Attrition Matters
Attrition refers to those departures from the straightforward
pathway to claim acceptance.
Every work-related injury, illness, or death that does not
result in an accepted workers’ compensation claim has implications. Workers may have to bear more of the
financial loss, settle for lesser care, and receive more limited support. The prevention system may lose data or get a
skewed view of the risk profile of the employed labour force. Cases departing
from the workers’ compensation pathway result in costs arising in or out of the
course of employment being shifted—externalized—to others, including public and private health
insurers (and their premium payers or funders), social programs, community
resources, taxpayers, and families.
From an economic standpoint, cost-shifting associated with
the attrition of cases may represent a substantial subsidy to employer’s cost
of production.
The Pathway and Attrition Points from Work-Related Injury
to Accepted Claim
Work-related injuries occur. Globally, more than 130 countries have developed public policy to address the financial impact of this reality of harms to participants in the employed labour force.
Injuries range in severity and consequence; where work is of
causative significance (not necessarily the sole cause, but a meaningful
contributor), this counts as a work-related injury.
Note: For this
analysis, “work-related injuries” includes all injuries, illnesses, diseases,
and fatalities resulting in more than three days away from work or medical
expense (or an immediate fatality). Most US states and one Canadian province
impose waiting periods on workers’ compensation claims. This provision simplifies the discussion in
future parts in this series.
Starting with the population of all work-related injuries,
the following outlines the pathway to claim acceptance and the three main attrition
points along the way:
1. Public
policy defines scope and coverage.
Each jurisdiction defines who and what is covered by its workers’
compensation legislation.
o Some
systems cover all workers; others exclude certain occupations or industries.
o Some
cover all injuries and diseases; others limit coverage or exclude mental
injuries.
o The
choice of public policy model (e.g., Bismarck, Beveridge, Woodhouse) produces
different levels of inclusivity and funding schemes.
In the US, Australia and Canada, the public policy choice is
a workers’ compensation model providing an exclusive remedy that protects
employers from suit (in exchange for funding a no-fault insurance system) and
providing prescribed compensation, payment of medical costs, and rehabilitation
services.
The choice and implementation of a public policy model creates
the first attrition point: Attrition by Intentional Design, policy
choices that determine which workers, industries, and injuries qualify for
potential compensation.
The attrition rate will vary with the injury rate of the
excluded categories. For this analysis, we
will assume a similar injury rate, similar severity and therefore attrition
proportional to the employed labour force and excluded harms.
2. Claims
Initiation
A work-related injury event is (often must) be reported to
the compensation authority, typically through an employer, physician, or direct
worker report. The process of claim initiation is complete only when a worker
or survivor formally submits a claim.
This brings us the second attrition point: Attrition by Barriers that impede or
prevent a formal claim from being established.
Many potential claims are never initiated because of
barriers:
o Worker
centric barriers: fear of retaliation, lack of trust, cultural norms, lack
of knowledge, availability of perceived easier or more beneficial alternatives,
or belief the process is not worth the hassle.
o Employer
centric barriers: lack of knowledge, active or passive claim suppression,
or discouragement.
o System
centric barriers: complex forms, reporting or processing delays,
jurisdictional overlaps, or third-party involvement.
We will expand on these barriers
in the third installment in this series.
3. Claims
are processed and adjudicated.
Once a valid claim is received, it enters the formal decision process. This
stage may be called adjudication, claim review, or adjustment carried out by a
review officer, entitlement officer, claims manager, adjuster, or review
officer.
Evidence is gathered, causation assessed, and standards (onus of proof,
standard of proof) applied according to established policies and directives.
Adjudication may involve investigation and deliberation, ending with a decision
to accept (allow) or deny (disallow).
Here, policy interpretation, practice directives, and
evidentiary standards all affect the likelihood of acceptance. This
constitutes the third attrition point:
Attrition by Policy, Practice, and Process. This captures the
deliberate decisions rendered regarding a specific claim. Outcomes other than
an accepted claim from this process or adjudication stage in the pathway
typically include claims that are denied (disallowed, rejected) as well as
those that are withdrawn or deemed abandoned.
4.
The Population of Accepted Claims
The initial pool of work-related injuries has experienced attrition, leaving
only accepted claims satisfying all of the following:
- The
worker and harm falls within the system’s scope of coverage.
- The
harm is reported and a claim is initiated.
- The
claim meets all policy and evidentiary requirements (including standards
and onus of proof), process requirements and practice directives.
- The
injury, illness, or death is determined to be work-related.
- An
“allow” decision rendered.
Once accepted, further adjudication determines the type and
amount of compensation, duration of benefits, and rehabilitation or
return-to-work support. While most accepted claims proceed smoothly, the
pathway to acceptance filters out many potential cases long before this stage.
Summary
Work-related harms to workers occur; many are within the
scope the scope of the workers’ compensation model adopted in the jurisdiction. Many work-related injuries are reported to
the workers’ compensation authority, subjected to an adjudication process, and
result in accepted workers’ compensation claims.
We identified three attrition points where cases of work-related
injury depart from this pathway:
- Attrition
by Intentional Design – limitations built into policy and legislation
(who and what is covered).
- Attrition
by Reporting Barriers – obstacles to initiating claims, including
worker, employer, and system factors.
- Attrition
by Policy, Practice, and Process – decisions made during adjudication
that exclude some claims.
In subsequent parts of this series, we will quantify the
attrition at each of these points, examining the factors that contribute to the
attrition, and consider what might be done to reduce unnecessary attrition to
improve fairness, prevention, and accountability in workers’ compensation
systems.
