Determinants of escalating costs in low risk workers' compensation claims

Edward J. Bernacki, Larry Yuspeh, Xu Guang Tao

Research output: Contribution to journalArticle

Abstract

OBJECTIVE: To identify and quantify attributes that lead to unanticipated cost escalation in workers' compensation claims. METHODS: We constructed four claim categories: low initial reserve/low cost, migrated catastrophic (low initial reserve/high cost), high initial reserve/low cost, and catastrophic (high initial reserve/high cost). To assess the attributes associated with the increased cost of migrated catastrophic claims, we analyzed 36,329 Louisiana workers' compensation claims in the four categories over a 5-year period. RESULTS: In the 729 claims initially thought to be low-cost claims (migrated catastrophic), the most significant predictors for cost escalation were attorney involvement and claim duration, followed by low back disorder, married/single/divorced status, male gender, small company size, high premium, reporting delays, and older age. These injuries accounted for 2% of all claims but 32.3% of the costs. Accelerated escalation of costs occurred late in the claim cycle (2 years). CONCLUSION: Certain attributes, particularly attorney involvement and claim duration, are associated with unanticipated cost escalation in a small number of claims that drastically affect overall losses. The results of this study suggest that these cases may be identified and addressed before rapid escalation occurs.

Original languageEnglish (US)
Pages (from-to)780-790
Number of pages11
JournalJournal of Occupational and Environmental Medicine
Volume49
Issue number7
DOIs
StatePublished - Jul 2007

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Workers' Compensation
Costs and Cost Analysis
Lawyers
Divorce

ASJC Scopus subject areas

  • Public Health, Environmental and Occupational Health
  • Health, Toxicology and Mutagenesis

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Determinants of escalating costs in low risk workers' compensation claims. / Bernacki, Edward J.; Yuspeh, Larry; Tao, Xu Guang.

In: Journal of Occupational and Environmental Medicine, Vol. 49, No. 7, 07.2007, p. 780-790.

Research output: Contribution to journalArticle

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