COMPACT

The Newsletter for Workers’ Compensation Professionals November 2001

Minnesota Department of Labor and Industry 443 Lafayette Road N. St. Paul, MN 55155

Inside ...
Articles
Rehab provider conduct and accountability outcomes ........................ 5 Interest rate update ............................. 5 Update: Danny’s Trannys vs. State of Minnesota ........................................ 5 Update: Roy vs. Gas Supply Inc. (WCCA, Aug. 6, 2001) ........................... 6 Customers happy with hotline service ...... 7 Work comp family farm coverage ............. 8 Minnesota work comp insurance costs continue decline ................................... 9 Latest data shows slight increase in indemnity costs ................................. 10 Exposure-related occupational disease ..... 13

Tables
Customer Assistance hotline survey ......... 7 Family farm coverage ............................ 8 Average indemnity and medical costs of insured claims, policy years 1984-1998, adjusted for wage growth ...................... 11 Average indemnity cost of indemnity claims, 1984-2000, adjusted for wage growth: Insurance data vs. DLI data ...... 12 Number and percentage of occupational disease indemnity claims, 1996-1999 ....... 13

Forms
Subscription renewal ............................. 4 Publications order form .......................... 15 ‘Rule 101’ order form ............................. 17

Summaries of decisions
Workers’ Compensation Court of Appeals ........................................... D-1 COMPACT is a publication of the Minnesota Department of Labor and Industry. Its purpose is to provide department news and workers’ compensation case information to professionals who work within Minnesota’s workers’ compensation system. Correspondence should be sent to: COMPACT editor, Minnesota Department of Labor and Industry, 443 Lafayette Road N., St. Paul, MN 55155; by e-mail at DLI.Communications@state.mn.us. Subscription requests should be sent to Customer Assistance Publications, Workers’ Compensation Division, 443 Lafayette Road N., St. Paul, MN 55155; by e-mail at DLI.brochure@state.mn.us. Visit www.doli.state.mn.us/compact.html to view this publication on the Web. Upon request to the editor, COMPACT will be made available in alternative formats such as Braille, large print or audiotape. Minn. Supreme Court decisions................ D-21

Minnesota work comp insurance costs continue decline
By Brian Zaidman, Senior Research Analyst Research and Statistics

Minnesota is classified as an average cost and an average benefit state by Actuarial & Technical Solutions (ATS), an actuarial consulting firm. ATS recently released its annual report about the net comparative cost of workers’ compensation insurance for the manufacturing industry sector. The ATS report ranks all nonmonopoly insurance states’ workers’ compensation insurance costs and ranks all states’ expected average cost for wage-replacement benefits. The insurance cost ranking is based on voluntary market manual rates in effect on Jan. 1, 2001, and a uniform payroll distribution for more than 60 manufacturing classes. Because the ATS net insurance costs are based on a uniform payroll distribution, the net costs are not the actual average insurance costs for manufacturers. The net comparative cost is not fully adjusted for deductible policies. ATS also produces a ranking of the average statutory benefit, based on the average manufacturing wage in each state and a uniform injury distribution. For the manufacturing sector, the national average net comparative cost of workers’ compensation insurance on Jan.1, 2001, was $3.09, which represents a 4 percent decrease compared with the 2000 national average of $3.21. The countrywide average cost is the lowest it has been since the late 1980s. According to the ATS ranking, which shows each state’s rate relative to the national average, Minnesota’s comparative cost increased from $2.60 in 2000 to $2.68 in 2001, a 1.0 percent increase. This follows decreases of 13.9 percent and 8.8 percent in 1999 and 2000, respectively. The 2001

comparative cost nonetheless represents a 58 percent decrease relative to 1992, when the comparative cost was $6.19. ATS classifies Minnesota as an average cost state. In 1999 and 2000, Minnesota was classified as a lower cost state. Minnesota’s insurance rate index value, the rate as a percentage of the national average rate, was .867 for 2001. This places Minnesota 18th lowest out of 45 states ranked. For 2000, the index was .810, which ranked Minnesota as 13th lowest. In 1992, Minnesota was 34th lowest. The rankings of Minnesota’s neighbors are (lower number means lower rates): Iowa, 12; South Dakota, 15; and Wisconsin, 17. North Dakota’s rates are not ranked because it uses a monopolistic rating system. The Jan. 1, 2001, statutory benefit index value for Minnesota was .994 (compared with the national average of 1.00). For 2001, Minnesota ranks 25th lowest out of 50 states on this measure. Last year, Minnesota ranked 24th lowest, with an index value of .980. ATS classifies Minnesota as an average benefitlevel state. Neighboring states ranked (lower rank means lower benefit levels): South Dakota, 1; Wisconsin, 15; North Dakota, 26; and Iowa, 30. The complete report, Workers compensation state rankings, manufacturing industry costs and statutory benefit provisions – 2001 edition, is available from Actuarial & Technical Solutions at (631) 471-8655.

COMPACT

9

November 2001