Study: Recession Has Little Impact on Workers’ Comp Costs Per Claim in Maryland

Modest growth of workers’ compensation indemnity costs per claim in Maryland indicated little evidence of the potential impact of the recession, according to a new study by the Workers Compensation Research Institute (WCRI).

Amid recessionary pressures, indemnity costs per claim – payments for lost wages, loss of earning capacity, or permanent impairment or disability – grew four percent per year from 2007 to 2009. This rate of growth was slower than the growth in most other study states and gave the Maryland system a competitive advantage relative to other states, said WCRI.

The study indicated that during a recession period, one would typically expect to see wage growth and return to work of injured workers slow because there were fewer jobs available. In addition, there might be more incentive to settle cases for both parties because of greater uncertainty regarding the future. However, none of these characteristics apply to the Maryland experience.

For example, the average weekly wage in Maryland claims grew about five percent per year from 2007 to 2009, similar to the growth rate in prior years. The average duration of temporary disability remained stable and the percentage of claims with more than a week off from work changed little, indicating scant evidence of slower return to work.

Further, the study said it found no evidence that there was an added incentive to settle cases as the frequency of lump-sum settlement cases changed little and lump-sum payments per claim decreased modestly.

In contrast, WCRI said it found evidence in many other study states of potential recessionary impact such as slower wage growth and an increase in the duration of temporary disability.

This study also found that medical costs per claim in Maryland were among the lowest of the 16 states included in this report. Furthermore, the overall growth in medical costs per claim in Maryland from 2004 to 2009 was the slowest among the study states without major reforms.

Source: WCRI