By Julie Sutton
In 2001, the Oregon workers compensation system granted
or reinstated 13 awards of Permanent Total Disability (PTD) benefits and
rescinded 14, for a net loss of 1 claim awarded PTD benefits.
Declining PTD grants
The figure of negative 1 net PTD award in 2001 is a record low and continues
the recent trend of relatively few awards. The large drop in net awards
between 1988 and 2000 was primarily the result of the declining number
of PTD grants, as there had been no sustained increase in the number of
benefit rescissions. However, the number of recissions increased dramatically
in 2001 due largely to the passage of Senate Bill 220 in late 1999.
Senate Bill 220 required responsibility for all claim closure activities
to be transferred to insurers and self-insured employers by June 30, 2001.
Notice of closure (NOC) became a new order level for PTDs in 2000. Two
awards of PTD were rescinded at this new order level in 2000, increasing
to 13 benefit recissions in 2001. Additionally, 11 PTD grants were awarded
at the NOC order level in 2001.
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 has 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 awards) for 2001 PTD cases totaled negative $1.4 million,
compared to $8.1 million in 2000 and about $64.9 million in 1988.1
1These 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
Following are average costs and other claim characteristics for grants
awarded in 2001, regardless of net awards, with comparisons made to earlier
Average total costs for grants have risen by 6 percent since 2000, and
are over four times higher than what they were in 1988. Average indemnity
for grants rose by 54 percent and average medical costs for grants dropped
by 7 percent from what they were in 2000; however, the small number of
claims also contributes to volatility in average costs. Average medical
costs for grants are ten 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 2001, SAIF was the insurer in 39 percent of the PTD grants, compared
to 50 percent the previous year. Private carriers covered 46 percent with
self-insurers covering the remaining 15 percent. In 1988, SAIF carried
61 percent of PTD grant cases.
For 2001 grants, the average lag from date of injury to date of order
granting PTD benefits was 6.3 years, a slight drop from 6.7 the previous
In 2001, PTD grants involved multiple part injuries in 62 percent of the
cases and injuries to the back in 15 percent of the cases. In 2000, the
back was the injured body part in 17 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 24 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. Over the last five years, injuries
in manufacturing were 66 percent higher than that of any other industry.
Blue collar occupations have accounted for 76% of PTD grants.
For 2001 grants, the worker had been with the employer an average of
nine years when the injury or illness occurred, nearly twice as long as
the average of five years reported in 2000 and in 1988. Men accounted
for 92 percent of PTD claimants in 2001, the same percent reported the
previous year. The average age of PTD claimants in 2001 was 46 compared
to the average of 43 over the prior five years.
For grants since 1997, 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, accounting
for 21 percent and 26 percent of cases, respectively. The event most often
resulting in a PTD grant has been a fall, at 33 percent of cases. Structures
and surfaces have been the most frequent source of injury leading to PTD,
at 32 percent.
Excerpts from Oregon Administrative Rules on
Permanent Total Disability, Effective 1/1/02
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
(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 from commuting:
(A) The area within a 50-mile radius of claimants place of
residence at the time of:
(i) the original injury; or
(ii) claimants last gainful employment; or
(iii) insurers determination; or
(iv) reconsideration by the Director.
(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
(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) not have withdrawn from the workforce during the period for which
benefits are being sought and be willing to seek regular and gainful
(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) Notices of closure 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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If you have questions about the information contained
in this document please contact by e-mail or phone: Julie
Sutton, Research Analyst, Research & Analysis Section, Information
Management Division (503) 947-7349.
This document was originally published in December 2002.
[Printed form: 440-2112(12/02/IMD)]
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