In 2000, the Oregon workers compensation system granted
or reinstated 12 awards of Permanent Total Disability (PTD) benefits and
rescinded 6, for a net total of 6 claims awarded PTD benefits.
Declining PTD grants
The figure of 6 net PTD awards in 2000 is a record low and continues the
recent trend of relatively few awards. The large drop since 1988 in net
awards is primarily the result of the declining number of PTD grants,
as there has been no sustained increase in the number of benefit rescissions.
In 1988, PTD grants totaled 73 at the Evaluation Unit of the Workers
Compensation Division and 127 at the Hearings Division of the Workers
Compensation Board, compared to 2000 figures of six and three, respectively.
In late 1999, Senate Bill 220 became effective, requiring responsibility
for all claim closure activities to be transferred to insurers and self-insured
employers by June 30, 2001. Notice of closure became a new order level
in 2000. In 2000, 2 awards of PTD were rescinded at this new order level.
Changes to statute and administrative rules have had an effect on PTD
grants. The 1987 reforms (House Bill 2900) mandated use, at all levels,
of standards for evaluating permanent disabilities. New administrative
rules on evaluating disability (OAR 436 chapters 30 and 35), implemented
during 1988, provided a more uniform process for claim determination.
A later amendment, effective in late 1990, codified case law that had
strictly interpreted the statutory mandate that a potential PTD claimant
seek regular and gainful employment. And, in 1995, the law was amended
again to read that a gainful occupation is one that pays wages equal to
or greater than the state mandated hourly minimum wage. This change is
one reason why the number of PTD grants have decreased. Claimants seeking
PTD because they are unable to perform work at a gainful and suitable
occupation must obtain testimony from a certified vocational counselor
(see excerpts from Oregon Administrative Rules).
Changes in claims handling are another likely factor behind the decrease
in PTD grants. The SAIF Corporation, for example, created a Critical
Claims Unit focused on management of claims for severe injuries.
Perhaps most significant in sustaining the trend of fewer PTD grants has
been the claims disposition agreement (CDA, also known as compromise and
release settlement), legalized by Senate Bill 1197 in 1990. In a CDA settlement,
a worker typically gives up the right to future benefits, except medical
services, in exchange for a lump-sum settlement. The agreements approved
by the Workers Compensation Board certainly include cases that would
have been awarded PTD at some level of the system. The CDA also forestalls
benefit rescissions resulting from insurer review and litigation, as well
as subsequent reinstatements on appeal. Note, however, that a CDA is not
a rescission of a PTD award because medical benefits, including palliative
care, remain available.
In sum, there is no single explanation for the decline in PTD grants.
Factors having a broad impact upon the workers compensation system,
such as changes in Oregons economy, shifts in the industrial mix
away from more hazardous forms of employment, and increased emphasis upon
workplace safety and health, may have reduced injury severity, as well
Reports by carriers of their net costs (average cost of grants multiplied
by number of net grants) for 2000 PTD cases totaled $8.1 million, compared
to $13.8 million in 1999 and about $64.9 million in 1988.1
1 These figures represent paid costs
for all indemnity awards, medical care, and rehabilitation; plus reserves
set aside for future expenses; minus anticipated relief from the Handicapped
Workers Program and reimbursements for Preferred Workers; and excluding
Retroactive Program benefits.
Following are costs and other claim characteristics for grants awarded
in 2000, with comparisons made to earlier years.
Average total costs have risen by 27 percent since 1999, and are four
times higher than what they were in 1988. Average indemnity dropped by
24 percent and average medical costs rose by 55 percent from what they
were in 1999; however, the small number of claims also contributes to
volatility in average costs. Average medical costs are nearly eleven times
what they were in 1988, due to the increasing cost of medical care within
the system in general, and the likelihood that claims granted PTD represent
injuries more severe than in the past.
The incurred costs for the PTD award make up a large portion of incurred
indemnity, which may also include temporary and permanent partial disability,
and rehabilitation. Factors influencing trends in PTD indemnity costs
include the benefit schedule in effect for the date of injury and the
workers weekly wage and life expectancy.
In 2000, SAIF was the insurer in 50 percent of the PTD grants, compared
to 45.8 percent the previous year. Private carriers covered the other
50 percent. In 1988, SAIF carried 61 percent of PTD grant cases.
For 2000 grants, the average lag from date of injury to date of order
granting PTD benefits was 6.7 years, a slight increase from the previous
In 2000, PTD grants involved multiple part injuries in 42 percent of the
cases and injuries to the back in 17 percent of the cases. In 1999, the
back was the injured body part in 21 percent of the cases, while in 1988,
the back was involved in 57 percent of grants. Over the last 20 years,
back injuries as a percentage of all accepted disabling claims reached
a peak (31 percent) in 1986, declining thereafter to 25 percent currently.
The change in back injuries as a percentage of all accepted disabling
claims does not, by itself, explain the steep drop in back injuries leading
to PTD awards.
Note: The sum of the percents may not add
to 100 due to rounding.
Other claims characteristics
The small number of grant cases in recent years warrants caution in identifying
trends in other claims characteristics. No meaningful differences were
found between workers who were awarded PTDs in various industries or occupations.
Over the last five years, injuries in manufacturing more than doubled
that of any other industry.
For 2000 grants, the worker had been with the employer an average of
five years when the injury or illness occurred, slightly higher than the
average of four years for 1999 and the same average reported in 1988.
Men accounted for 92 percent of PTD claimants in 2000, compared to 87.5
percent the previous year.
For grants since 1996, injuries to muscles and tendons (includes sprains
and strains) and injuries to bones and nerves (includes fractures and
dislocations) have been the most prominent natures of injury, each accounting
for about one-fourth of cases. The event most often resulting in a PTD
grant has been a fall, at 29 percent of cases. Structures and surfaces
have been the most frequent source of injury leading to PTD, at 29 percent.
Excerpts from Oregon Administrative Rules on
Permanent Total Disability, Effective 1/15/98
Determining Permanent Total Disability
(1) A worker is permanently and totally disabled if permanently incapacitated
from regularly performing work in a suitable and gainful occupation.
For the purpose of this rule:
(a) Incapacitated from regularly performing work means
that the worker does not have the necessary physical and mental capacity
and the work skills to perform work.
(b) Suitable occupation means those occupations that exist
in a theoretically normal labor market, within a reasonable geographic
distance, for which a worker has the training or experience, and abilities
to realistically perform the job duties, with or without rehabilitation.
(c) Gainful occupation is defined as: those types of general
occupations that pay wages equivalent to, or greater than, the state
mandated hourly minimum wage. Those types of general occupations that
pay on a commission or piece-work basis, as opposed to a wage or salary
basis, may not be gainful employment depending upon the
facts of the individual situation.
(d) Work skills as used in this rule means: those skills
acquired through experience or training that are necessary to gain
and adequately perform skilled, semi-skilled or unskilled occupations.
Unskilled types of general occupations require no specific skills
that would be acquired through experience or training to be able to
gain and adequately perform the unskilled occupation. Every worker
has the necessary work skills to gain and adequately perform unskilled
types of general occupations with a reasonable period of orientation.
(e) A reasonable geographic distance as used in this rule
means either of the following unless the worker is medically precluded
(A) The area within a 60-mile radius of claimants place of
residence at the time of:
(i) the original injury; or
(ii) claimants last gainful employment; or
(iii) determination by the department; or
(iv) reconsideration by the Appellate Unit.
(B) The area in which a reasonable and prudent uninjured and unemployed
person, possessing the same physical capacities, mental capacities,
work skills and financial obligations as claimant does at the time
of his rating of disability, would go to seek work.
(f) Types of general occupations as used in this rule
means: groups of jobs which exist in a theoretically normal labor
market, and share similar vocational purpose, skills, duties, physical
circumstances, goals, and mental aptitudes. It does not refer to any
specific job or place of employment for which a job or job opening
(g) Theoretically normal labor market as used in OAR 436-030-0055
and 0065 means a labor market that is undistorted by such factors
as local business booms and slumps or extremes of the normal cycle
of economic activity or technology trends in the long-term labor market.
(2) Disability which existed before the injury shall be included in
determining permanent total disability.
(3) In order for a worker to be determined permanently and totally disabled,
a worker must:
(a) prove permanent and total disability;
(b) make reasonable effort to find work at a suitable and gainful
occupation or actively participate in a vocational assistance program,
unless medical or vocational findings, including the residuals of
the compensable injury, make such efforts futile; and
(c) be willing to seek regular and gainful employment.
(4) When a worker retains some residual functional capacity and is
not medically permanently and totally disabled, the worker must prove
inability to regularly perform work at a gainful and suitable occupation,
and the futility of seeking work if claimant has not made reasonable
work search efforts, by competent written vocational testimony. Competent
written vocational testimony is that which is available at the time
of closure or reconsideration and comes from the opinions of persons
fully certified by the State of Oregon to render vocational services.
It does not include opinions by claimants, physicians or others not
(5) Determination Orders and Orders on Reconsideration which grant permanent
total disability shall notify the worker that:
(a) The claim shall be reexamined by the insurer at least once every
two years, and may be reviewed more often if the insurer chooses.
(b) The insurer may require the worker to provide a sworn statement
of the workers gross annual income for the preceding year. The
worker shall make the statement on a form provided by the insurer
in accordance with the requirements under section (6) of this rule.
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