Permanent Partial Disability (PPD) claims made up the largest share of total costs per claim in New York in 2018 at nearly 70% of total costs, despite representing 15% of overall claims, according to a recently published study by the Workers’ Compensation Research Institute (WCRI). Researchers examined claims from 2018 that were evaluated in 2023, 60 months after injury. Although medical-only claims represented the most overall claims (61%) in the same year, they only accounted for 3% of total costs, the report states.
According to the New York State Workers’ Compensation Board’s 2023 Annual Report, nearly 170,000 claims were assembled and completed in 2023, and direct written premiums for workers’ compensation policies exceeded $5 billion in the same year.
Types of Benefits
“The New York workers’ compensation law (Chapter 67 of the Consolidated Laws) authorizes seven different types of benefits,” according to the report. They are medical benefits, temporary total disability (TTD) benefits, temporary total disability (TPD) benefits, PPD benefits, disfigurement benefits, permanent total disability (PTD) benefits, and death benefits.
Why 60 Months?
“From previous WCRI research, we have determined that, historically, income benefits have been paid and medical care delivered for a much longer time in New York than in most other states,” explains the report. “As a result, snapshots of system performance using even 60 months of experience will understate aggregate system costs and medical care. Although this understatement occurs in most states, it is a larger concern in New York than in most other states. This longer timeframe suggests that we should focus our results on claims with more than 60 months of experience.”
However, the report notes that there were important policy changes in the New York system that dictate otherwise. “The 2018 Permanent Impairment Guidelines for Determining Schedule Loss of Use required that the 2018 guidelines reflect advances in medicine that 'enhance healing and result in better outcomes.'” As a result, determination of PPD benefits could result in changes in the amount awarded.
Furthermore, the report explains, “Effective for injuries after April 9, 2017, insurers can receive a credit against the maximum benefits payable for non-schedule PPD for any period of temporary disability paid beyond 2.5 years.” This provision could also impact the amount of benefits paid; therefore, “based on these considerations, we report results for 2018 claims at 60 months of experience, which provides the most complete and current observations about the life cycle of a New York workers’ compensation claim.”
Percentage of Claims and Dollars by Claim Type
“Most workers’ compensation claims in New York are medical-only claims—claims for which medical payments have been made but no indemnity payments have been made or no indemnity reserves have been established,” states the report. “For 2018 claims with on average 60 months of experience…61% of claims were medical only. Of the remaining 39% of claims, TTD claims represented the next largest share at 20%, and PPD claims represented 15% of claims.”
PPD claims, as previously mentioned, made up the majority of total cost, at 68%. TTD claims “made up the next largest proportion of total costs at 27%. While representing the largest share of claims, medical-only claims represented only 3% of costs.”
Analyzing the data, the report found that, for 2018 claims, only 7% of claims remained open as of March 2023. When examined by claim type, the proportion of claims that remained open varied. About 14% of PPD claims and 14% of TTD claims from injury year 2018 remained open as of March 2023.
Timing of Payments
“For 2018/2023 indemnity claims, the median number of days between the date of injury and date of first indemnity payment was 26 days in New York,” the report explains. “Most indemnity claims begin with payment of TTD benefits. Some claims then shift to TPD benefits, while others transition to PPD benefits or a lump-sum settlement. If eligible, a workers will generally transition from temporary disability to PPD benefits, once the worker has reached maximum medical improvement (MMI).”
Duration of Temporary Disability
“For claims with temporary disability payments (regardless of claim type), the average duration of temporary disability was 25 weeks. The overwhelming majority of indemnity claims had a duration of temporary disability of one year or less (83%), while 8% of claims had a duration of between one and two years and 8% had a duration of temporary disability of more than two years,” explains the report. “By claim type, the average duration of temporary disability for PPD claims, at 35 weeks, was longer compared with the duration of temporary disability only, at 22 weeks. Not surprisingly, among PPD claims, a larger proportion of claims had a duration of temporary disability longer than one year, compared with the claims with temporary disability only.”
Time to First PPD Payment
“The median number of days between date of injury and first PPD payment was 729 days (just under two years),” according to the report. “Note that for some of those claims, the first (and last) PPD payment may have been a lump-sum settlement. Additionally, for some claims, there were substantial gaps between the last temporary disability payment and the first PPD payment. An examination of a small portion of claims that received their first PPD payment more than three years after injury suggested that these gaps may be sizable. This may mean, in some cases, that the worker returned to work but remained entitled to PPD benefits.”
Researchers also examined the distribution of claims by different categories of time to first PPD payment and found that, among PPD claims, 41% of claims received a first PPD payment within one to two years, 28% of claims received a first PPD payment within two to three years, and 23% of claims received a first PPD payment three years or more after the date of injury.
Average Payment Per Claim: Medical, Indemnity, and Benefit Delivery Expenses
The average total cost per claim for a 2018/2023 indemnity claim in New York was $56,535, the report states. “Among key underlying components, indemnity benefits represented 59%, medical payments represented 27%, and benefit delivery expenses represented 13% of total costs per claim.”
For TTD claims—indemnity claims with only TTD benefits—the average total cost per claim was $30,666, with a fairly close split between indemnity and medical payments, at 43% and 38%, respectively, of total costs per claim. For those claims, benefit delivery expenses represented 19% of total costs per claim.
Average Payment for PPD Claims by Type of Indemnity Benefit
According to the report, “for 2018/2023 claims, the average total payment per claim for PPD claims was $102,874, which includes indemnity benefits, medical payments, and benefit delivery expenses…indemnity benefits paid on PPD claims can include different types of indemnity payments, including temporary disability payments, scheduled and non-schedule PPD payments, and lump-sum settlements. Indemnity benefits per claim represented 66% of total costs per claim for PPD claims. Medical payments per claim represented 23% of total costs per claim, and benefit delivery expenses represented 11%.”
Researchers split PPD claims into three groups: PPD claims with only lump-sum settlements, PPD claims with only PPD payments, and PPD claims with both lump-sum settlements and PPD payments. “For 2018/2023 claims, most PPD claims were lump-sum only claims—81% of claims. The remaining PPD claims were divided fairly evenly between claims with only PPD payments (10%) and claims with both PPD payments and lump-sum settlements (9%).”