AIA: Targeted Workers’ Comp Reforms Needed in North Carolina

With the positive impact of the mid 1990’s workers’ compensation reforms diminishing and higher costs creeping back into the system, the American Insurance Association (AIA) is actively supporting legislation (S. 984) to put the workers’ comp system of the nation’s 10th largest state back on a healthy footing.

“Several negative trends in North Carolina concern insurers and the businesses they serve. These problems need to be addressed sooner rather than later,” said Raymond Farmer, AIA assistant vice president, southeast region. “We need to modernize the system by cutting costs, reducing inefficiencies and eliminating abuse, all of which better serve the interests of insurers, business and employees.”

While the number of workers’ comp claims has experienced a steady decline over the past 10 years, North Carolina’s average indemnity payments have risen, and are very large in comparison to other states.

According to the National Council on Compensation Insurance, the average cost per claim was higher in North Carolina than in South Carolina, Virginia, Georgia, Kentucky, and 19 other states. In the recent 2005 Workers’ Compensation Research Institute CompScope Study, North Carolina was more than 27 percent above the average indemnity benefits for claims with more than seven days of lost time.

“Predictability and stability in the system has diminished,” said Farmer. “The reforms we’re seeking target those elements of the system that prolong the claims process, invite litigation and delay return to work.”

Reform provisions in S. 984 include:

• Placing a cap on lifetime benefits at 500 weeks;
• Providing adequate time to complete the claims process prior to beginning payments to the injured employee;
• Allowing carriers and employers reasonable access to employees’ medical information;
• Clarifying the requirement for injured employees to accept suitable employment;
• Establishing clear medical criteria to be used in determining awards for injury due to asbestos or silica exposure.

The first legislative hearing for S. 984 is expected to be held the week of May 2, 2005.