Facts About Worker’s Comp In Maine

(Updated October 2010)

In 1992, Maine ‘s comp rates were the highest in the nation and twice as high as the number 2 state. Today, eighteen years after the enactment of the reforms, Maine is now closer to the middle of the pack in several (but not all) studies.  In recent years, there has been much less legislative activity concerning the comp statute, so the law itself remains stable.  But rules and regulations passed and proposed by the Workers’ Comp Board are having significant impact on the system.

The new board structure may have put an end to the deadlock that characterized the WCB prior to 2004, but in the interim, it has become increasingly clear that the Executive Director controls the final voting outcome as the tie breaker. For one and one half years, there were only two management members on the Workers’ Comp Board.  Finally, in the past 12months, there has been a full complement of three Management and three Labor members.   At the urging of the Management members, there is only one regularly scheduled WCB meeting per month. However, in April, one of the Labor members of the board resigned making the WCB at least temporarily lopsided again.

Initially the new statute set the duration for injuries at 260 weeks (5 years). Starting in 1998, the WCB was directed to extend the duration by an additional 52 weeks every year should it find the frequency of cases involving the payment of permanent or temporary total benefits below the national average based on frequency based on the latest unit statistical plan.  The maximum numbers of weeks was set at 520 weeks.   In 2009 the WCB Board extended duration to the maximum of 520 Weeks.

Unlike any other state in the country, an injured workers’ permanent impairment (PI) provides an exception to a durational cap.  Eligibility for extended benefits are based on a threshold, established every two years by the WCB.  This threshold is calculated with data collected by the board form employers and insurers.  If an injured worker with partial incapacity has a PI  above the threshold, he/she can receive indemnity payments for the life of the disability.  Initially, the statute set this threshold at 15% PI.  It was reduced to as low as 11.8% at one time, but has remained at 13.4% since 2004. However, Jeffrey Kadison, the actuary hired by the Workers’ Comp Board to deal with the PI Threshold, has set in motion an employer review of 3800 files for which the WCB “has no PI recorded.” There is also a push to require employers to obtain PI assessments on all injured employees who have returned to work.  Both projects are labor intensive and costly for employers.

Maine Rate Filing decreased by 7% in 2009 and increased .4% in 2010

In November 2009, Maine Bureau of Insurance Commissioner, Mila Kofman, announced that the Bureau had approved the National Council on Compensation Insurance (NCC) request for a decrease in workers’ compensation loss costs for the policy year 2010 of 7%.  She said, “This requested decrease is a result of employers continued efforts to promote safety in the workplace. In this kind of environment, claims are less frequent, and NCCI’s loss costs filings indicate that the frequency of claims is decreasing faster than any increase in medical and indemnity costs for each claim.”  NCCI calculated the 2010 loss costs have increased .4% in 2010.

Maine Compared to Other States

Workers’ Compensation Rankings
National rankings are not always consistent, mostly because they use different data. Generally, Maine is about in the middle of the pack.

Oregon Workers’ Compensation  Ranking 2010 shows Maine “improved” from being the 5th costliest state to being the 8th costliest state.

Oregon Workers’ Compensation Premium Rate Ranking 2008
It is true that the costs to Maine employers have decreased significantly since the 1992 reforms. However, Workers’ Comp costs have decreased all over the country.   It is important, therefore, to be aware of Maine’s rankings with the rest of the country. For example, Maine moved from 8th place in premium rate ranking in 2007 to 5th highest place in 2008!!  From the 2008 Oregon Workers’ Compensation Premium Rate Ranking Summary: “There have been many changes in workers’ compensation premium rates among the various states throughout the past five years. In 2004 and 2005, there were slightly more states with increases than decreases in rates, but starting in 2006, decreases have outnumbered increases. Roughly two-fifths of the states that report premium level changes to the NCCI had a net rate increase over the five-year period from Jan. 1, 2004, to Dec. 31, 2008”

Class              Title                  ME Position (1= most expensive)
5           Farm: Nursery                     1
3724    Machine/equip Repair       1
5183    Plumbing NOC                     1
5403    Carpentry NOC                    1
5445    Wallboard installation        1
7229    Trucking (long distance      1
7380    Chauffeurs                             1
8380    Auto/service Repair            2
5213    Concrete Constr. NOC         3
7228    Trucking (local)                    3
7600    Phone/Telegraph                 3
9403    Garbage Collection              3
7539    Electric Power                       4
9014    Bldgs.-Oper.by Contract     5
8833    Hospital: professional         6
2710    Saw Mill                                  7
8810    Clerical Office                        8
8824    Retirement Health Care      8
5506    Street/Road paving              8
8832    Physican and Clerical           9
8044    Store: Furniture                    9
2812    Cabinet Work-Pwr. Mach    9
5022    Machinery NOC                    10
5645    Carpentry-Det Dwellings    10

Other Statistical Analyses

Actuarial & Technical Solutions, Manufacturing Industry Costs and Statutory Benefit Provisions, 2009 Edition
Actuarial & Technical Solutions, Inc. 2009 report finds Maine to be 26th out of 45 states in “Comparative Costs.” The term comparative cost, as used in this study, refers to an average cost based upon a uniform payroll distribution among the various states. (19th highest)

In terms of Wage Replacement Benefits, Maine ranks 32nd out of 50 states.  (18th highest)
For Clerical Services, Maine ranks 35th out of 45.  (10th highest)
For Manufacturing, Maine is 26th out of 45 (19th highest again).

In all instances, Maine’s costs are above average.

The  Supplemental Benefit Fund Assessment has decreased since the fund was established. This assessment funds the reimbursements to self-insured employers and insurance companies who made payments within the deltas of moving PI thresholds and benefit durations for injuries dating from 1993 to 2000.  In 2002, the rate was 2.64% for insurers and dropped to 1.64% in 2003; for self-insureds, the rate dropped from 3.62% to 2.95%. In 2006, the rate for insurers increased slightly for insurers, and dropped again for self-insurers. Initial funding was $8 mil.  For the past four years, it cost only $3.5 to run the fund.   In 2009, the cost dropped to $2,700,000.

Prior
Assessments:       Funding          Policy Holders        Self-Insurers
CY2002               $8,000,000         2.46%                     3.62%
CY2003               $6,000,000         1.64%                     2.95%
CY2004               $4,000,000         0.97%                     1.84%
CY2005               $3,500,000         0.82%                     1.82%
CY2006               $3,500,000         0.83%                     1.58%
CY2007               $3,500,000         0.79%                     1.90%
CY2008               $3,500,000         0.81%                     1.80%
CY2009               $2,700,000         0.68%                     1.32%

National Council of Compensation Insurance (NCCI) 2009

The National Average for indemnity costs is $21,000.  In Maine, it is $26,000.
The National Average for medical costs for lost time claims is $26,000.  In Maine it is $29,000.

October 2009:  More from NCCI:

Maine Workers Compensation System— An Overview October 2009
• Average indemnity costs have been increasing.
• Average medical costs continue to increase substantially.
• Frequency continues to decrease however the rate of decline has slowed.

Misclassification of workers/independent contractors has become a key issue in many states this legislative session

Medical costs exceed indemnity costs nationally.  In Maine, medical costs are 55% of the total benefit costs.  Hospital services have the highest price increases.