Claims Disposition Agreement

Introduction:

Oregon Revised Statute 656.236 in part states: "parties to a claim, by agreement, may make such disposition of any or all matters regarding a claim, except for medical services, as the parties consider reasonable, subject to such terms and conditions as the director (Department of Consumer & Business Services) may prescribe." This law became effective July 1, 1990.

The agreement between the worker and the insurer, called the Claim Disposition Agreement (CDA), is legal when approved by the Workers' Compensation Board (Board) in accordance with rules set by the director and the Board. Some of the salient features of the CDA process are: only accepted issues can be released; medical services are still retained for life; the worker can request the Board to disapprove the CDA within 30 days (commonly referred to as the cooling-off period) of the request; the Board order is not subject to review; and submission of a CDA stays all other action on that claim, except for medical services.

Note: Effective June 7, 1995 Senate Bill 369 waives the 30-day cooling off period if the claimant was represented by an attorney at the time the CDA was signed.

Requests and orders:

During the fiscal year ending June 30, 1995, the Workers' Compensation Board received 3,487 requests for approval of CDAs - an average of 291 a month. This is an increase of 5.9 percent over the previous year. During this year 3,399 agreements were approved, seven were disapproved, and 17 were withdrawn. This compares with 3,216 approvals, 19 disapprovals, and 19 withdrawals in FY 1994. All seven disapproved this year were considered unreasonable as a matter of law. Figure 1 below gives the distribution of requests and orders for fiscal years 1991 through 1995.

Characteristics of Claimants Involved in Approved CDA

Age of claimants:

Almost a third of the claimants were between 30 and 39 years, and the large majority (92.4 percent) were between 20 and 59 years at the time of approval of the CDA. (See Figure 2.) This is just 1.1 percentage points more than last year in the proportion in these age groups. A little over 7 percent were 60 and over (1.2 percentage points less than last year); just 0.4 percent were under 20 (more than last year). The average age at time of CDA approval was 41.8 years, 2.4 months less than last year.

The average age at injury in these cases was 38.2 years, about 14 months more than the historical average age at injury for all accepted disabling claims.

Year of injury:

For CDAs approved in FY 1995, 87.6 percent of the injuries had occurred in the five-year period beginning with calendar year 1990. The corresponding proportion last year was 83.1 percent. The year of injury with the highest percent of the approved CDAs (36.0 percent) was 1993. In cases with more recent injuries, 12.1 percent had a 1994 date of injury and 0.1 percent (four cases) had a 1995 injury. (See Figure 3.)

Award type:

Once a claimant with an accepted claim becomes medically stationary, the claim is closed and evaluated for permanent disability. The disability level such as Permanent Partial Disability (PPD) or Permanent Total Disability (PTD) is determined at time of closure. Of the approved CDAs, 26.2 percent were on claims that had never been closed or had been closed without an award.

An award had already been made in 73.8 percent of the claims resolved by a CDA, compared to 75.9 percent last year: PPD in 54.0 percent, TTD by itself in 19.4 percent, PTD in 0.3 percent; 0.2 percent involved fatalities; this distribution is somewhat different from that of last year, with a decrease of 5.1 percentage points in PPD and an increase of 3.0 points in TTD. (TTD may also have been awarded in those cases with a PPD or a PTD award.)

Litigation:

Seventy-seven percent of the CDAs had previous or current litigation, the same as last year. Some 1,095 claims had pending litigation at the time of filing of the CDA, 88.2 percent of which were pending at Hearings Division.

Body part:

As expected, the back was the body part most frequently injured in these CDAs (32.0 percent). Injuries or illnesses involving other unscheduled body parts accounted for 37.6 percent of the CDAs, while 30.4 percent dealt with scheduled body parts (extremities such as arms and legs). This is very similar to the FY 1994 distribution.

Historically, the distribution of accepted disabling claims by body part has been somewhat different. In these claims, the back accounts for about 29 percent of the claims, and scheduled body parts for about 44 percent.

Insurer:

Over one half (54.3 percent) of the claims involving CDAs were insured by private insurers; 31.0 percent had the SAIF Corporation as the insurer, and self-insured employers accounted for 13.6 percent of the cases; for FY 1994, the respective percentages were 50.9 percent, 34.8 percent and 12.9 percent. Non-complying employers were involved in yet another 1.1 percent in FY 1995. For calendar years 1991 through 1994, the average share of accepted disabling claims for SAIF Corporation, private insurers, and self-insured employers were 28.0 percent, 50.9 percent, and 20.4 percent respectively. (See Figure 4.) Self-insured employers' use of CDAs for release of claims is significantly less than SAIF Corporation's or private insurers'.

CDA Outcomes

Issues released:

Of the approved CDAs, 99.8 percent released all issues (except medical services), as compared to 99.4 percent last year. Just one issue was released in only one case, the issue being survivors' benefits.

Settlement amounts:

The total settlement amount (inclusive of attorney fees) for the approved cases was $43.1 million for an average of $12,672, compared to $41.9 million last year for an average of $13,032. Of this, fees for the claimants' attorneys were authorized up to $6.6 million in 3,030 cases for an average of $2,179 per case, compared to $6.5 million in 2,904 cases last year for an average of $2,237 per case. Over half (53.6 percent) of the settlement amounts this year were between $1,000 and $10,000; 95.1 percent were $40,000 or less. (See Figure 5.) Only 20 cases (0.6 percent) had a settlement amount of over $100,000. The average settlement amount decreased steadily from FY 1991, the first year CDAs were authorized (Figure 6). When cases were grouped according to various claim characteristics, the average settlement amount varied, sometimes considerably. See Table 1.

The largest variation was seen in the different benefit types. The average for TTD was the lowest at $5,303, while the settlement amounts for fatalities and PTDs averaged $150,753 and $75,975 respectively.

For disabling claims, the average settlement was $13,343, over $9,500 more than that for non-disabling claims. For claims involving injury to scheduled body parts, the average was $10,309, about $3,400 less than that for unscheduled body parts. Claims without a history of litigation were settled for an average of $13,568, $1,170 more than for litigated cases.

Looking at the settlement amounts by insurer type, self-insured employers had the lowest average with $12,085; private carriers averaged $339 more. SAIF had the highest average with $13,428, which would go down by $86 if the non-complying employer cases (which SAIF handles) are also added to their count.

Type of settlement:

Ninety-nine percent of the CDAs were settled by a lump sum payment, same as last year; the remaining 1 percent was by structured settlement.

Reimbursements from departmental reserves:

Claims of some claimants qualify for reimbursement of compensation (partially or fully) from departmental reserves. CDA settlements may also qualify for reimbursement in these cases. Insurers were reimbursed for CDA payments in CDAs approved by the Board in FY 1995 as follows: seven claims from the Handicapped Workers' Reserve for $321,552, 12 from the Retroactive Reserve for $341,448 and 18 from the Reemployment Assistance Reserve for $194,770.

CDAs and disputed claim settlements (DCSs):

Of the CDAs approved in FY 1995, 1,131 (33.3 percent) had some denied issue associated with the same injury or illness settled by a DCS between 31 and 120 days before the CDA approval. The average CDA settlement amount in these cases was $10,357, 18.3 percent less than that for all CDAs.

Time lags:

In the CDAs that were approved by the Board, the median time lag between the request and the order was 32 days, same as last year; 99 percent were approved within 52 days of the request. The median time lag from injury to order was 758 days (2.1 years). The 30-day "cooling-off" period during which Board action on the agreement is suspended in case the claimant changes his/her mind is also included in these time lags.

Trends:

Fiscal year 1995 is the fifth year since CDAs were first introduced, and some trends in CDA characteristics are now evident. As seen earlier (Figure 6) there is a definite decreasing trend in the settlement amounts, although the rate of decrease has slowed down after the first two years. In fact, if the current trend persists, there will be a leveling off of the settlement amount.

There has been a consistent increase in the percent of open cases disposed of by CDA (Figure 7), rising steadily from 16.3 percent in FY91 to 24.5 in FY95, and the median time lag between injury and CDA approval has shown a distinct downward trend (Figure 8).

The average age of claimants in claims settled by a CDA has also been showing a decreasing trend except for a slight increase in FY 1993 (Figure 9).

As far as benefit types are concerned, the only noticeable trend is in PPD; the percent of cases with PPD awards disposed of by a CDA shows a decreasing trend (although slight) (Figure 10).

Even though no particular trend is seen in TTD cases, FY95 shows the highest percent of TTD cases disposed of.

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This document was originally published in March 1996.
Document URL: http://www.cbs.state.or.us/external/imd/rasums/cda95.htm

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