The Future of Workers’ Compensation: Changing Times, Persistent Issues

 

At a recent personal injury/disability management conference, a panel moderator told delegates, “The topics on our agenda today are strikingly similar to those on the conference agenda from a decade ago” (Rebecca Harris, GM Regulatory Services WorkCover WA at PIEF Conference, Perth:  October 2024 [paraphrased]).     

Her statement resonated with my own experience attending workers’ compensation conferences in each of the past five decades.  Many of the issues facing workers’ compensation systems are perennial; the relative priority and details change with the times, but the themes are enduring. 

The lead agenda items from the 1954 International Association of Industrial Accident Boards and Commissions (IAIABC) Conference 70 years could appear on any workers’ compensation conference held today: 

• Rehabilitation of Injured Workers
• Problems and Methods of Handling Small Risks and Excluded Employees Who May Want Voluntary Coverage
• Adequacy of Workmen's Compensation
• Occupational Cancer Hazards

The keynote speaker at the 1954 IAIABC conference in Quebec was the then Under Secretary of the U. S. Department of Labor, Arthur Larson.  The conference was themed around “Workmen’s Compensation Problems” and Larson’s keynote was entitled “The Future of Workmen’s Compensation”. 

Larson had recently completed his master work on workers’ compensation law (Larson, A. (1952) Workmen’s compensation law. Matthew Bender) and was concerned about the deficiencies and inconsistencies in the current (1954) state of workers’ compensation.  Many of those concerns align with issues facing workers’ compensation in 2025.

Inconsistent Benefits Across Jurisdictions.

Variations in coverage across states and provinces were “a grave and growing concern” for Larson.  The variation in the compensation rate for temporary disability, the absence of full indexing of permanent benefits, and uneven compensation for fatalities are contemporary issues in today’s workers compensation landscape.  Larson was aware of the legislative differences among US states and Canadian provinces (acknowledging greater consistency in Canada) and some of these differences were highlighted in his speech.    

Coverage Gaps

Larson noted, “Elective-coverage provisions, and hazardous-employment requirements, inspired by ancient fears of unconstitutionality, have long since been proved unnecessary… but remain with us to deprive large numbers of people of needed protection.”  His comments were focused on agriculture, small business workers, and many occupational diseases not covered. Gaps in coverage continue to exist.  In Canada, where half the jurisdictions cover well over 90% of the employed labour force, six jurisdictions cover a far lower percentage (ranging from about 70 to 80%) of the employed labour force. In the US, there are gaps in coverage for gig workers, independent contractors, and remote workers face uncertainty in coverage.

Inadequate Benefits & Duration

Larson was very concerned about equity.  He states, “A system which has been assigned the function of taking care of income loss due to industrial disability has no right to stop payments to a totally permanently disabled man after 8 or 10 or 15 years.”  Today, the growing participation rate of older workers and increased longevity accentuate the inequity of age-limited compensation; compensation for catastrophic injures is inadequate in many jurisdictions.  Although all but one Canadian province has eliminated waiting periods and most provide wage replacement at 85-90% of net (spendable) earnings, many US jurisdictions limit benefits through maximums on payments or insured earnings forcing workers to bear much more of the financial loss than the grand bargain of workers’ compensation was supposed to provide.

Medical & Rehabilitation Challenges

In Larson’s 1950’s context, there was a burgeoning of medical and rehabilitation knowledge.  “Entire new worlds of knowledge have been opened up on such matters as physical and vocational rehabilitation, and medical techniques for minimizing the disabling effects of injury, with relatively little parallel development of compensation law.”  His concerns are echoed today where many jurisdictions provide little or no access to vocational rehabilitation.  Critics often complain about the lag in workers’ compensation recognizing certain medical treatments including the use of medical marijuana and psycho active drugs; rules regarding treatment and care particularly for mental injuries and limits on graduated return-to-work initiatives often seem arbitrary and inconsistent with the nature of mental injuries in particular.

Externalization of costs  

Larson emphasizes the need for workers’ compensation to pay for the costs of work-related injury, disease and death. He opposes externalization to public assistance or other social insurance.  This also speaks to the adequacy and sufficiency of the benefit levels paid to workers.  Larson was clear,  “The products of this area are sold all over the world ; the cost of workmen's compensation goes into the price of these products and is borne by consumers everywhere; yet the voters and property owners of that city and State go on bearing the cost of public relief in the form of local taxes for a burden that is supposed to be borne by the consumers of the product.”

Federalization versus State/Provincial Control

Larson believed workers’ compensation was best administered at the state level. He noted Canadian provinces were strongly oriented in this fashion.  State/provincial control of workers’ compensation is not universal; the US, Canada, and Australia are the exceptions to the general rule of national programs.  Larson cited from his previous speech in Boston on the same topic:  

"We should adhere to State responsibility for the system, and not succumb to the temptation of federalization… I believe that workmen's compensation should remain a State matter”

Larson decried the disparities among jurisdictions, particularly those providing the least coverage. There have been efforts at harmonizing compensation  or establishing national standards (see John F. Burton’s 1972 Report of the National Commission on State Workmen’s Compensation Laws), but as I have shown in previous posts, few US jurisdictions meet or exceed its recommended levels of compensation.  Other comparative studies of workers’ compensation laws report the differences and make disparities quite apparent, but don’t set standards (see tables at AWCBC.org, Comparison of Workers’ Compensation Arrangements in Australia and New Zealand 2023, NASI’s Workers’ Compensation Benefits, Costs and Coverage – based on 2022 data, particularly Appendix D, which summarizes IAIABC/WCRI’s report on State Workers’ Compensation Laws).

Extraterritorial & Jurisdictional Issues

As Larson put it, “Interstate operations, in transportation, construction, selling, and the like have increased greatly, while compensation provisions on extraterritorial coverage and jurisdiction remain as chaotic and jumbled as ever.”  With remote workers, mobile workers, and now digital nomads working from remote cabins, cruise ships, and caravans through satellite access, the concept of the “workplace” has changed dramatically.  More workers travel across jurisdictional lines from home to work, and some have multiple jobs in two or more jurisdictions.  Questions regarding jurisdictional issues remain with many concerns over workers falling through the cracks in coverage or being overwhelmed by the jurisdictional requirements.  Many are forced to elect the jurisdiction to consider their options and complete forms at a time when they simply need treatment and funding to survive.  While there are some inter-jurisdictional agreements (see AWCBC-IJA as an example), there are still gaps including those digital nomads, remote workers working outside of or across multiple jurisdictions.

The Role of Public Assistance & Safety Nets

“Workmen’s compensation was supposed to make public assistance unnecessary; but in some areas a considerable fraction of compensation recipients are driven to seek public assistance to bring their benefits up to a subsistence level.”  Larson saw the policy ideal but recognized compensation levels were often inadequate.  The consequences include inconsistent rules regarding access to other social insurance schemes, reduced benefits and offsets as well as confusing differences across jurisdictions remain.   

Workplace Safety & Emerging Risks

Larson’s speech predate OSHA’s formation in 1971 so his focus was more on the insurance side of workers’ compensation.  He certainly was aware of workplace safety and the need to identify emerging risks.  “New diseases and new hazards have come with new industries and processes,” said Larson, noting that legislation makes little or no provisions for quick adaptations and inclusions, noting only “piecemeal amendments and sporadic revisions”.  Transportation network “gig” workers did not exist in the past and we are in the midst of deciding jurisdiction by jurisdiction whether the workers in this industry will be in or out of coverage.  Occupational disease coverage remains a contentious issue with uneven coverage, especially for conditions like PTSD and long-latency illnesses (e.g., cancer, long COVID). Larson would recognize the challenge Covid-19 created for workers’ compensation systems; whether he judge the response in terms of new presumptions a consistent response is open to debate.

Purposeful Leadership and Focus

Larson sought to inspire the leadership of workers’ compensation systems present at the Quebec conference.  He understood the need for greater understanding in the broader community about the purpose of workers compensation. “I would like to see the name of the whole system changed from Workmen's Compensation to Workmen's Restoration …. The purpose would be to dramatize the fact that the system no longer should be satisfied to "compensate" in the sense of paying off or buying off the injury; it should now recognize an obligation to make the injured workman whole, to restore him to health and useful employment, through careful medical attention, and through systematic physical and vocational rehabilitation.” 

While no system has adopted Larson’s proposal, many have renamed their systems or significant programs under their legislative mandate to align with his intent, shifting the focus away from compensation and towards prevention and return to work.  The “WorkSafe” moniker (emphasising these authorities’ roles in occupational health and safety both in primary prevention and safe return to work) has been adopted in British Columbia and New Brunswick in Canada, Victoria and Tasmania in Australia, and by some specific programs run by or with the workers’ compensation programs in Montana and Saskatchewan. South Australia’s WorkCover corporation rebranded in 2015 as ReturnToWorkSouthAustralia. [Larson would likely approve]. 

Recurring themes

At that recent PIEF conference, Rebecca Harris moderated a “Leadership Perspective” panel.  The discussion included the need for “purposeful leadership” and the need to engage stakeholders, increasing their understanding of workers’ compensation and the issues we collectively face, and the need moral authority/ social capital to operate in the workers’ compensation space.  I’m certain anyone in workers’ compensation would recognize echoes from the themes in Larson’s 1954 speech. 

The full text of Larson’s address is contained in  “Workmen's Compensation Problems, 1954: Proceedings--40th Annual Convention of the International Association of Industrial Accident Boards and Commissions, Quebec, Canada, October 3-7, 1954, Issue 180” on Google Books.  I could not locate an actual recording of Larson’s address, but I have linked an AI synthesized [Speechify] audio version of Arthur Anderson’s 1954 IAIABC Address- The Future of Workmen’s Compensation.

Artificial Intelligence and Real-world Implications in Disability Management

 

“Leveraging Artificial Intelligence (AI) in Personal Injury and Disability Management.”  I’ve delivered presentations on this topic at the International Forum on Disability Management (IFDM)  in Vancouver (BC), the Personal Injury Education Foundation (PIEF) Conference in Perth (Western Australia) and to audiences at online webinars and roundtables. While I could attend only a fraction of seventy-five or so sessions and hundred other presenters, what I’ve learned through my attendance and interaction with presenters, providers, and delegates (including injured workers) at these events has implications for everyone working in this field.  Here are a few highlights related to AI in personal injury and disability management.

AI is everywhere …even if we are reluctant to admit it

Microsoft quotes an International Data Corporation (IDC) study finding 70%+ of Fortune 500 companies have now use CoPilot in their organizations (Ignite 2024: Why nearly 70% of the Fortune 500 now use Microsoft 365 Copilot November 20, 2024,  Microsoft Hong Kong).

About 75% of knowledge workers worldwide are using AI in their work (Microsoft and LinkedIn, 2024 Work Trend Index Annual Report, May 8, 2024 https://news.microsoft.com/2024/05/08/microsoft-and-linkedin-release-the-2024-work-trend-index-on-the-state-of-ai-at-work). 

Use of AI by university staff ranges from 62% for sessional staff to 81% for senior staff with academic staff at 75%   (McDonald, P., Hay, S., Cathcart, A. & Feldman, A. (2024). Apostles, Agnostics and Atheists: Engagement with Generative AI by Australian University Staff. Brisbane: QUT Centre for Decent Work and Industry. https://eprints.qut.edu.au/252079)

What I learned in presenting this information is that AI use among professionals in personal injury and disability management is in its initial stages. This is not to say personal injury and disability management (PI&DM) professionals are unaware of AI’s potential. About a third of delegates I encountered work employers who have implemented enterprise-wide AI solution such as CoPilot or ChatGPT enterprise editions. What has been missing is the direct and specific information they need to effectively use AI tools for their specific tasks. Other delegates report overly restrictive prohibitions against using AI at work, although many admit to simply using AI on their own smartphones or laptops or on home computers. This last point is consistent with the Microsoft/LinkedIn study that found 52% of people who use AI at work are not waiting for their employers to catch up, are bringing using AI on their own devices, and are reluctant to admit to using it for their most important tasks.

AI is pervasive in the PI&DM research and provider community

Although some organizations are restraining or restricting application of AI, the research community is applying the technology to significant effect. One presentation at the IFDM demonstrated this effectively. “Using Ensemble Random Forest Algorithms to Predict and Determine Return to Work Intervention and Pathways” (Mohamad Amrizad Bin Ruslin & Nabilah Binti Ahmad, presentation at IFDM 2024, Vancouver) might not have the catchiest title but the results were exceptionally noteworthy.

Working for Malaysian Social Security Organization (SOCSO) – PERKESO, the research focused on supporting workers with disabilities through personalized Return to Work (RTW) interventions. The challenge is familiar to every workers’ compensation and disability insurance program administration: to optimize case management to reduce the duration and cost of rehabilitation while increasing success rates. The research employs a collection of AI tools to predict and recommend tailored RTW interventions based on individual worker data (e.g., injury type, job demands, rehabilitation needs) at or near the claim acceptance. The results demonstrated high predictive accuracy, increased efficiency in allocating resources, and faster return to work. The researchers also introduced their new  work on creating their own “official disability guide” based solely on Malaysian disability cases. This makes sense; while quantifying “impairment” is standards-based assessment, “disability” duration and impact are dependent on external factors including access to care, employment law,  and societal acceptance.

Use of AI among providers to the personal injury prevention, worker’ compensation, and disability insurance industries is advancing quickly. Advanced analytics such as those demonstrated by Clara Optics provide risk identification using AI’s assessment of unstructured data sources was a good example. Individual claim alerts display when there are changes in sentiment, pain, medication, or psychological impact.

Michelle Barratt for Arriba Rehab Management (RM) presented their propensity model (Lean-On_Learning_Assistance-LOLA). This up-front AI application accurately predicts worker risks, allowing RM to tailor service delivery pathways in line with evidence-based protocols, resulting in improved RTW outcomes, reduced case costs, and durations.

Amanda Johnston demonstrated the integration of AI into case KINNECT’s CareLever platform of claims management systems. The Dashboard  in their “Manage” module provides case-specific, real-time status of outcomes and quality, client centricity, and even file “hygiene.”  One interesting feature was the digitization of psychosocial questionnaire instruments such as the ARIBA (Assessment of Risk for Interpersonal Violence or Abuse), DAS (Depression Anxiety Stress Scales) and Fear Avoidance Belief Questionnaires (FABQ): The Fear-Avoidance Belief Questionnaire. This method avoids the delay between the time a case manager determines the need for such assessments and the return of scored results by allowing for delivery to the client by SMS messaging, automated scoring and return to the case manager.

Several presenters spoke about their implementations of AI include CoPilot. Presenters and  service providers in the exhibition space demonstrated the power of leveraging AI to create promotional and educational materials. For example, a complex regulatory-change news release transforms into podcast discussing the changes through a generative AI application; that’s a particularly powerful demonstration of making information more accessible for certain learning styles. One service provider now creates podcasts from curated RSS (really simple syndication) feeds for their clients.

Functional assessments are always a challenge in PI&DM. In countries such as Australia, where long distances may be involved, the application of XTRA’s AI application to perform virtual measurements such as range of motion from real-time video consultation sessions was impressive.

This power of AI to eliminate delays in the sequence of case management events was evident several presentations and product demonstrations I viewed at both the IFDM and PIEF conferences. PI&DM professionals can help clients achieve the best outcomes when diagnostics, assessments, and treatments occur without delay.

Compliance with prescriptions and medical instructions can also lessen duration of disability. Several presenters and providers demonstrated AI systems helping clients more actively participate in their treatment and rehabilitation through SMS messaging and notifications  to prompting medication use,  exercises, symptom reporting, and appointment attendance.

Dr. John McMahon (Navigator Group) presented his practical application using machine learning in PI&DM. One application was Jin, an avatar-based virtual claims examiner. While not perfect, the AI-driven Jin interacts with clients, collects data, and can do so in more than one hundred languages. The power and potential of this technology illustrates the breadth of where AI is taking us.

Implications for PI&DM

These recent conferences and interactions with audiences on AI illustrate the challenges and opportunities AI presents PI&DM. It is evident that there is an explosion of work in the AI field but AI literacy among professionals is lagging. A recent study found that more than 70% of university staff and instructors were using AI in their work, but gaining their knowledge about AI from friends, family, and YouTube videos. Informally, the students and PI&DM professionals I encounter typically have experimented with AI but lack fundamental understandings about this technology, its ethical uses, and limitations.

Leadership in PI&DM organizations must make AI strategies and guidelines a priority. They must also recognize that this is not a “one and done” exercise. Whatever you decide, you will have to revisit your strategy often.

Administrators have a tough task when it comes to AI. They must adapt to the changing environment, select applications and products, while maintaining privacy, confidentiality, and regulatory responsibilities. Even these tasks require raising AI literacy levels throughout the organization. They must recognize that restricting AI use is a futile effort. With 80% of  knowledge workers already using AI, enabling ethical, regulatorily compliant use is the only option. Gaining and sustaining professional levels of AI literacy needed to achieve that will be an ongoing challenge in terms of time, effort, and cost.

Individual practitioners need a professional level of AI literacy in order to critically assess the AI tools they use and to understand both the upstream use and downstream consequences of AI proliferation. 

For educators, have similar challenges professionally. Raising and maintaining our own AI literacy while incorporating AI into our courses to better prepare PI&DM professionals is an immediate priority.

Final thoughts

A 2023 IBM publication concluded “AI won’t replace people, but people who us AI will replace people who don’t.”  To put this more directly for our profession, AI will not replace PI&DM professionals, but PI&DM professionals who use AI will replace those who don’t.

There is no avoiding what AI is bringing. Only increased AI literacy among PI&DM professionals, administrators, leaders will optimize the impact of AI for the clients we serve.

Personal Injury & Disability Management Education in the AI Era

Artificial Intelligence(AI) is a reality. It is in our workplaces; it’s integrated into the software we are already using; and it is not going away.

Eighty percent of knowledge workers are already using AI (according to IBM/LinkedIn survey May 2024); everyone with access to the internet-that’s more than 2/3rds of the human population on earth—has access to AI tools. The standard desktop applications we use everyday —Google Workspace, Microsoft Office, Adobe Acrobat, Google Search— are already AI-enabled.

AI leverages scarce resources , empowers people with disabilities, and facilitates access to education and employment. This is the AI reality and it is just the beginning.

Generative AI in Continuing PI&DM Education

As a continuing education instructor in the personal injury and disability management (PI&DM) space, I’ve detected the use of AI tools in on-line discussion posts and formal assignment submissions over the last two years. That’s not really surprising given the universal access to many AI tools and the growing number of organizations with enterprise-level deployments of AI applications or platforms with inherent AI features. This only adds to the urgency for changing my instructional approach.

In my view, PI&DM educators must recognize this AI reality and prepare professionals to understand and use AI technology in both their work and studies.

That’s why I now allow AI tools to be used in the courses I teach.

AI in a PI&DM course: an example

In a recent on-line DM continuing educational course, I permitted (but did not require) the use of AI tools. The one week continuing education course is structured around two discussion exercises and formal assignments. In each exercise, each student selects a case scenario and provides an initial post of 250-400 words. Other participants engage through online discussions by offering posts of 150-250 words that probe issues, add alternatives, or link proposed actions to literature or experiences. The interaction mimics a live classroom discussion, in an asynchronous format.

A Discussion Grading Rubric provides greater marks for greater participation along with allocations for demonstration of knowledge and critical thinking as well as meeting timeliness/length requirements. The discussions are the students’ opportunity to demonstrate their knowledge of course content and ability to apply concepts covered in the course materials.

Prior to the start of the course, every student received an email explaining the permissible (but not required) uses of AI tools. The advisory was replicated in the Required Reading section of the on-line module. A required 8 minute video (summarized in the slides posted here) provided further guidance on acceptable and unacceptable uses of AI tools. It introduced some common issues with AI tools including hallucinations.

An additional 22 minute video on AI was offered in the optional resources section of the module. This video provided basic AI literacy information.

The email, required reading instruction, and required video contained the following instruction regarding the course assignment:

You must provide an “attestation” statement with your assignment submission declaring:

a.      The AI applications were used in preparation of your assignment submission and for what purposes, OR

b.      No AI applications were used in the preparation of this assignment submission. 

Please view the required video for more information [link to 8 minute video].

Results from Discussion Exercises

Seventeen participants were registered for the course. On average, there were about 5 posts on three of five discussion scenarios, about eighty posts in total.

Only two discussions posts contained indicators of inappropriate citation and reference use. In both cases, unverifiable references (likely "AI hallucinations”) were detected resulting in a zero grade for the exercise.

Citations and references support the posted arguments and intended to provide evidence of understanding of course content and appropriate application; posts containing the unverifiable references were deleted.

Participants were advised of the unverifiable references and related posts were deleted to maintain academic integrity and avoid any inadvertent re-use of the posts or arguments purportedly supported by them.

Results from Assignment Submissions

Examining assignment submissions compliant with the attestation requirement revealed the use of inherent AI tools in desktop software by two thirds of the participants. One student noted use of a survey tool’s AI assistant in designing an assessment tool. Other students attested to using AI tools for research, alternative explanations to required readings, draft outlines, and grammar-checking.  

With the plethora of AI tools in the market place, it is not surprising that several AI tools reported in the attestations were new to me. Participants are mostly employed professionals and their available software is often a reflection of employer-determined deployments rather than personal choice.

Overall, submissions attesting to appropriate use of AI tools were straightforward to assess against grading criteria established for the course.

Discussion

From this experience, a  policy accepting certain AI uses can enhance assignment quality. Discussion submissions reflected good levels of knowledge demonstration, application of concepts, and timeliness-- similar to past performances in this course.

Declared use of AI tools was also associated with other factors such as high access of required and optional course resources.  This may simply reflect the diligence of these particular participants rather than any impact regarding AI.

Interestingly, in more than a decade of teaching this and similar courses, this was the first time I received no requests for time extensions to discussion or assignment submission deadlines. It is not clear to me why this was the case or if permitted access to AI for uses such as research and alternative explanations played a role in this observed difference from past patterns.

The detection of unverifiable references indicates a more fundamental failure in understanding of academic integrity protocols. Ironically, referencing an AI hallucination reveals the student did not access the cited work--something that might not have been detectable if a verifiable reference had been used. This suggests a need for further training in proper use of references as well as AI literacy around issues such as hallucinations.

Final Thoughts

This instructional experience reinforces the need for increased AI literacy in PI&DM education. This means moving beyond permissive policies to intentional course design integrating AI issues into the curriculum.

The alternatives are not tenable. Banning all use of AI tools in continuing education courses is impractical. AI is intrinsically present in everyday apps and likely in participants' available software environment.  Enforcement of extensive restrictions is difficult and really detracts focus from assessment of mastery. There are “AI detectors” available to instructors, but authentic, well-written original work fed into these will often result in  scores in the “likely AI-generate” range of the scale. (And, of course, such detectors may be defeated by asking  an AI app to “humanize” work to score lower on the “likely AI-generated” scale).

In a work world where AI tools are increasingly intrinsic, AI literacy and understanding of academic integrity must be priorities. Permitting use of AI tools is merely accepting reality. That’s easy. The hard part is incorporating AI technologies into the curriculum and improving AI literacy among PI&DM professionals… including instructors.

Mental Injuries- Part 3: Implications for Disability Insurers and Workers’ Compensation

 

The apparent rise in mental disability claims is a significant issue for disability insurers and workers’ compensation systems. The observed rise in workers’ compensation claims for mental injury must be interpreted in context.

I accept the following as a fundamental principle for  workers’ compensation:

If work is the cause of injury and disability, then the compensation and treatment should be funded by the employer.

 Failure to recognize work as the cause externalizes costs to others including the worker, other workers, and the community at large.   

The cost of compensation and treatment, the main components of workers’ compensation premiums nominally paid by the employer, are properly reflected in the overall cost of production.

Handwringing over costs often misses this underlying premise.  The degree to which any statute results in work-related cases of mental injury being discouraged or denied shifts more costs from employers (the nominal payers of workers’ compensation premiums) to taxpayers (who fund social welfare), other workers (who fund social insurance), and insured (who fund some or all the costs for disability insurance).  Externalization of work-related mental disability costs to other insurers and workers amounts to a subsidy of the cost of production.

Even if workers’ compensation fully covered all work-related cases, workers suffering work-related mental injuries must still bear the burden of the harm, and with their families,  carry some of the financial loss. 

Recap

In earlier posts in this series, I provided data on the increasing numbers of accepted workers’ compensation and disability insurance claims for mental injuries.  Here is a brief recap of our discussion so far.  

Work-related mental injury and disability have always existed but not always identified, accepted,  or counted.  At least some and perhaps most of the observed increase in mental disability claims may be attributable to changes in definitions of mental injuries, refined coding practices, decreased stigma, increased advocacy and awareness, reduced barriers to filing mental disability claims, and changes in the broader work environment.

Greater identification and recognition of mental injuries allows for greater access to short and long-term disability funds; recognition of the work-relatedness of some mental injuries leads to a rise in mental disorder claims for workers’ compensation.  Disability insurance and workers’ compensation both have administrative imperatives that drive the need for improved access to diagnostic and treatment services. Disability insurers have an added incentive to ensure claims that are work related are properly attributed and compensated by workers compensation; workers’ compensation has statutory and fiduciary requirements to ensure that only claims within the scope of coverage are accepted.  

Financial support for working-age persons with mental disabilities is limited.  Welfare (social assistance) may be available to most and most of the employed labour force have access to social insurance for severe and prolonged disability. 

Private group and individual disability insurance plans generally offer greater financial support than social insurance but are only available to a minority of the employed labour force;  financial supports for work-disabling mental conditions are typically time limited. 

Workers’ compensation typically offers greater financial support than disability insurance; while covering nearly all workers, the path to an accepted claim for mental disability is challenging ( by virtue of the work-relatedness requirement, onus and standard of proof levels, diagnostic services access/availability, restrictive definitions and exceptions  that may apply). 

Greater recognition, changing definitions, and reduction in stigma may increase claims … and that trend is reflected in the data workers’ compensation and disability insurance data. 

What to keep in mind when looking at Workers’ Compensation Mental Injury  data

Understanding what is going on in the data is not simple.  What gets counted, what periods are involved, administrative backlogs, and even the coding practices will influence reported data. 

As noted in earlier posts, work-related mental injuries may arise after physical injury, occupational disease, or treatment.  Mental disabilities may also arise without physical injury or disease through workplace bullying, harassment, and overwork.  Data that differentiates the nature and source of mental injuries are important to understanding how mental disability claims are occurring and changing in a jurisdiction.

Mental-injury claims data must be well understood before attempting any comparisons within a jurisdiction over time or across jurisdictions.  Even if data in multiple jurisdictions report identical categories of data, underlying differences in definitions, coding practices and coverage context may inhibit meaningful comparison.

As you examine the data across jurisdictions, verify consistency of definitions, practices, and scope over the study or reporting period.  Confirm the process and terminology for claim reporting, consideration, and decision during the reporting timeframe.  These considerations are in addition to accounting for the usual factors such as differences in demographics, industrial mix, etc. 

In this part, we look at data and recent changes in one workers’ compensation jurisdiction to highlight the complexity in understanding reported data.  The example is one with a high degree of transparency around work-related mental injury.  We will then consider some of the implications for disability insurers in the long and short-term disability space.  

Mental Disorder Claims – WorkSafeBC Data

Few workers’ compensation authorities publish data on mental disability claims.  WorkSafeBC is an exception.

WorkSafeBC is the exclusive insurer for workers’ compensation in British Columbia, Canada.  Coverage extends to about 2.7 million workers (about 95% of the employed workforce) and 280,000 employers in a province of about 5.5 million people. 

WorkSafeBC’s public accountability and transparency regarding mental injuries is well documented. The 2023 Annual Report is titled “Toward psychological health and safety” [see https://www.worksafebc.com/en/resources/about-us/annual-report-statistics/2023-annual-report/2023-annual-report-2024-2026-service-plan?lang=en] and provides details on the current strategies.  The annual report notes a nearly 30% increase in psychological-injury-only claims over the last five years.

This tells only part of the work-related mental injury statistical story.  WorkSafeBC also publishes an annual Statistics report.  The numbers in the following table not only account for the psychological-only-claims but also existing claims or claims for other injuries that have mental disorders to be considered as part of the claim.  The following table comes from the Statistics 2022 publication, the most recent version available: [available at https://www.worksafebc.com/en/resources/about-us/annual-report-statistics/2022-statistics ]

This shows that Allowed claims for mental disorders have grown.  It also demonstrates the status or disposition of other claims reported. In workers’ compensation articles, claims are often described as either “accepted” or “denied”.  In practice, the claim process is not a simple binary categorization.

The above table reveals a more accurate portrayal with clearer definitions regarding the status and disposition of mental disorder claims considered:  

1.     Claim data for 2022 is as of October 23, 2023. Data for 2020 is as of January 31, 2021. Data for 2019 is as of January 31, 2020. Data for 2018 is as of January 31, 2019. Data for 2017 is as of November 30, 2018.

2.     Disallowed claims are those that do not meet the requirements of section 135 of the Workers Compensation Act.

3.     Claims that require no adjudication or are rejected may have been filed in error or be rejected if the worker does not have WorkSafeBC coverage.

4.     Suspended claims are often those where the worker does not respond to a request for additional information or withdraws the claim. Suspended claims may proceed at a future date.

 

Why Data from One Jurisdiction Varies from Source to Source

The data provided by WorkSafeBC  in the annual and statistics reports differ from those provided by the Association of Workers’ Compensation Boards of Canada (AWCBC) in its National Work-Injury Program (NWISP) report.  The NWISP 2020-2022 report notes: 

This report contains Lost Time Claims by calendar year of injury, or diagnosis in the case of disease, that have been accepted for payment during the year of the accident – or in the three-month grace period (January 1st–March 31st) immediately following the reference year.

The AWCBC NWISP definitions page (see https://awcbc.org/en/statistics/national-work-injurydisease-statistic-program-definitions/) notes that the Nature of Injury coding refers to the “principal physical characteristic of an injury/disease”.  For BC in the years 2020-2022, the NWISP report records the following accepted clams under Code 52 Nature of Injury [(year) count]:  (2020)1303, (2021) 1599, (2022) 1559.  Timing, reporting,  and coding differences account for the lower counts in the NWISP when compared to the same years in the annual and statistics reports.         

Changing legislation

Even this detailed table lacks another key contextual factor.  As with most jurisdictions, the issues of work-related mental injury and disability were of significant concern to workers’ compensation policy makers and stakeholders. 

The Royal Commission on Workers’ Compensation in British Columbia nicely summarizes the issues as they stood in the late 1990s [ see Volume 2 Chapter 4 in “For the Common Good : Final Report of the Royal Commission on Workers' Compensation in British Columbia”, 1999].  The heightened awareness of mental injuries was evident in the public hearings and research briefs received by the Royal Commission.  The work of the Royal Commission and other reviews urged changes to the workers’ compensation legislation. 

Bill 49, Workers Compensation Amendment Act, 2002 contained a provision for “mental stress” claims.  The provision was narrow and had restrictions but was a shift toward greater acceptance.   

Over the years, the term “mental disorders” replaced “mental stress”  and the section expanded in ways that allowed for greater acceptance of claims.  The current section of the Workers Compensation Act of BC , Section 135  [available at https://www.bclaws.gov.bc.ca/civix/document/id/complete/statreg/19001_04#section135 ]   includes a presumptive clause for “eligible occupations” such as correctional officer, police officer,  and emergency medical assistant.  It also provided for additional occupations to be added to the presumption by regulation.      

Presumptions

I’ve mentioned presumptions in previous posts in this series. Although almost always rebuttable, presumptive clauses are more than symbolic gestures; they have real consequences. For example, presumptions:

• Shift the onus away from the worker having to prove work-relatedness
• Reduce stigma associated with filing claims.
• Speed processing time from consideration to decision (decrease individual case investigation, reduce processing times, may reduce suspended claims by lessening some evidentiary needs)
• May increase speed of access to needed treatment.
• May decrease worker appeals.

Presumptions change processes and operations of workers’ compensation insurers as reflected in the WorkSafeBC data. 

In 2018, a new mental-health presumption for municipal and federal firefighters, police, paramedics, sheriffs and correctional officers was established.

In 2019, additional occupations were added.  These included emergency response dispatchers, nurses, publicly funded health-care assistants, as well as forest firefighters, fire investigators and firefighters working for Indigenous organizations.

Effective June 2024, the presumption was expanded yet again, adding to the mental-health presumption community-integration specialists, coroners, harm-reduction workers, parole officers, probation officers, respiratory therapists, shelter workers, social workers, transition house workers, victim service workers and withdrawal-management workers.

The percentage of allowed claims adjudicated under presumptive clauses has typically increased in the years following the expansion of eligible occupations. 

Implications for Other Disability Insurers

In most jurisdictions, employment-based disability insurance plans (short and long-term disability known as STD and LTD) are not universal and those that exist do not always cover mental injuries.  Group disability plans are more common in unionized organizations, among larger employers, and in certain sectors such as healthcare.

In the BC context, disability insurance extends to about 1.3 million individuals, primarily through group plans.  If premiums are paid for in whole or in part by the employer, benefits are taxable.  Coverage ranges from about 50% to 70% of earnings. 

As noted in previous posts, disability insures have an incentive to control costs where another form of insurance is a first payer, or benefits can be coordinated.  Workers’ compensation is the first payer for work-related injury including mental injuries.  Many workers who would qualify for STD or LTD coverage may be required by their insurer to apply for workers’ compensation if there is a possibility of the mental injury being related to either a physical work injury or work-related occupational disease or a psychological only workers’ compensation claim. From the employee perspective, the benefit under workers’ compensation is generally greater than that from STD/LTD so there is an incentive to seek this coverage. Health care costs related to an accepted workers’ compensation claim may also increase the incentive to claiming . 

Changes in the presumptive clauses have three other important impacts for disability insurers.  The fact workers’ compensation may cover certain mental disorders raises the prospects of injured workers seeking benefits because of the increased awareness.  Increased numbers of people seeking benefits for mental disorders will increase the competition for diagnostic and treating mental health professionals—an already under-serviced provider segment.  The qualification difference between STD/LTD and workers’ compensation will result in cases started under a disability benefits plan being retroactively covered by a workers’ compensation claim, adding complexity to claims handling.  

Besides the direct cost and workload issues, workers’ compensation claims that are rejected or disallowed may well be subject to reviews and appeals, protracting the claim consideration.  We know that the iatrogenic effects of such processes may extend disability.   Increasing backlogs in handling workers’ compensation claims can have implication for disability insurer costs.

As noted in previous posts, access to diagnostic and treatment resources is critical but the availability of qualified professionals accepted by workers’ compensation and other insurers is limited.  Restricted access tends to drive up costs for services (such as consultation reports and on-going therapy) and length of disability.   

Final Thoughts

Many managers have had the experience of an employee with increasing absences.  The given and recorded reasons may be convenient (e.g., sickness, illness in family, etc.), low-hassle (sick leave, personal business day, vacation leave) alternatives to reporting a work-related mental injury or making a workers’ compensation or STD/LTD claim for mental injury or disability.  The motivations are obvious.  For the employer, the process is simple and easily managed like any other brief absence. For the employee, there is no stigma, little justification, and minimal hassle to access paid absence. Essentially, the costs of the work-related mental injury and disability are externalized to the worker and her family.

Many workers who cope with work-related mental issues on their own conceal disabling conditions under requests for sick leave and vacation time off until those avenues are exhausted; only then is a claim for  disability insurance, social insurance, or workers’ compensation claim reluctantly filed. 

The human cost to the worker/employee, their family and the community is the same regardless of where a claim is filed.  What may shift is the attribution of cause and funding consequences.    

It is too simplistic to say that the observed increases in workers’ compensation and disability insurance claims for mental injury reflect a deterioration in the mental health of the workforce or a worsening of exposure to causes such as work pressure/volume, harassment, or bullying.  To be clear, these are factors that need to be monitored and worthy of prevention.  The consequences of removing stigma and excessive barriers to filing disability and workers’ compensation claims for mental injury and disability are likely revealing more of what has been there all along.

It is also too simplistic to say “building resilience” is the solution to the rising claim counts.  While necessary, building a more resilient workforce is unlikely to change incidence but may well diminish severity.  More research is needed here. 

The human and social costs of mental injuries are immense and real.  Dismissing mental disability as a personal failing or weakness in the individual is a slap in the face to those experiencing the pain and consequences of mental injuries.   Fully recognizing work-related mental injuries and disabilities is essential to building the strategies and resources for primary prevention, early intervention, and increasing available supports for treatment.

The detailed claims analysis from WorkSafeBC and statistics from AWCBC,  SunLife, MunichRe, and SafeWork Australia quoted in this series are a first and important step in understanding workers’ compensation and disability insurance for mental disability.  Improved understanding through transparency and more investment in research are needed to better inform our policy decisions and foster improved outcomes.