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Patrick Springer, Published August 07 2010

More North Dakota injured workers' claims denied

A new report finds that denials of North Dakota injured workers’ claims “jumped dramatically” over a five-year review period but found claim practices were generally “sound.”

The review, intended to provide guidance to the state Legislature, recommended several changes in laws that would make it easier for injured workers to obtain certain benefits.

The report, obtained Friday by The Forum, evaluates the performance of Workforce Safety and Insurance, North Dakota’s workers’ compensation program, in key areas.

Among the findings by Sedgwick Claims Management Services Inc., consultants hired by state auditors for the review:

  • The adjusted rate of denied claims rose by almost 51 percent from 2005 to 2009, from 6.9 percent to 10.4 percent.

    The increase partly reflects a “change in management philosophy” that began in 2007 involving scrutiny of claims from injuries related to pre-existing or chronic medical conditions, such as work-related aggravation of arthritis.

    “A more rigorous review of medical evidence became a best practice,” the report said.

    Clare Carlson, WSI’s deputy director, said one reason for the jump in claim denials is that incentives to employers for early reporting of injuries contributed to the sharp rise in denials.

    “Consequently, there has been a lot of injuries reported that didn’t have to be reported,” he said. “They’d rather be safe than sorry.”

  • Claims analysts have difficulty deciding whether to award benefits in cases involving the aggravating effects of long-term heavy physical labor, repetitive motion and heavy equipment that might not result from a single work incident.

    The consultants made a “significant recommendation” that North Dakota could repeal a law that paid half of aggravation injuries that qualify for benefits and pay the entire claim, which would conform to “common industry practice.”

    The estimated cost of the change, $4.8 million, would result in a discounted premium rate increase of 2.2 percent.

    “We’ve got to really go through that,” WSI Director Bryan Klipfel said of the recommendation to repeal the law defining benefits for aggravation injuries. “I’d like to review the report.”

    Gordy Smith, who oversees the state’s performance audit program, said decisions about whether to pay benefits for aggravation of chronic conditions, such as a bad back, often are ambiguous.

    “There’s a lot of subjectivity in that,” he said. “There’s a lot of judgment that goes into deciding whether that’s going to be covered by WSI or not.” Therefore, he added, it’s helpful to see how North Dakota’s laws compare to other states.

  • Consultants recommended that North Dakota relax the threshold for awarding permanent partial disability awards for injured workers.

    By law, injured workers are eligible for awards only if the impairment is rated at 16 percent or more of the worker’s whole body, a threshold much higher than awards beginning with impairments of 1 percent, which the consultants said was common.

    The consultants estimated lowering the impairment award threshold from 16 percent to 10 percent would cost the insurance fund $909,604, an amount that could be offset by adopting more-current medical guidelines, which would save an estimated $1.1 million.

    “Consider that the threshold is an atypical approach to the awarding of PPI benefits,” the report said. It added, “And we cannot help but point out that the threshold was adopted at a time when WSI had a substantial deficit, not at a time when it was providing rebates to employers totaling more than $80 million.”

    The issue of balancing costs associated with changes in impairment awards and medical guidelines is complicated and merits more study, Klipfel said.

    “We concur to make it revenue neutral,” he said.

  • Recommended that WSI make greater use of independent medical examiners and rely less heavily on its half-time medical director to evaluate complex claims.

    “Independent Medical Evaluators have distinct advantages over in-house medical directors in that they examine the patient and take a history from the patient, as well,” the report said.

  • Found North Dakota’s use of narcotic painkillers was slightly higher than the national average for workers’ compensation programs, with Burleigh County, which includes Bismarck, standing out.

    “Notably, five providers in Burleigh County account for more than half the narcotics costs in the entire state, and this pattern has persisted over the past five years,” the report stated. The five doctors or clinics were not named in the report.

    The consultants made several recommendations for managing use of narcotic painkillers and disagreed with WSI’s response that it would limit the length of time patients could be on the medications.

    “There are some injured workers, for instance, who have poor surgical outcomes and who are in chronic pain,” the report stated. “Such workers may derive no benefit from a program that completely eliminates the use of narcotics to control pain as part of the overall treatment regimen.”

    The evaluation report deals with questions that go to the core of the workers’ compensation program, including laws defining benefit eligibility, Smith said.

    “Those are all kind of fundamental questions that will provide information for legislators,” he said.

    A legislative committee that oversees the workers’ compensation program will hear testimony on the performance evaluation report next Friday.

    Readers can reach Forum reporter Patrick Springer at (701) 241-5522