Workers’ Compensation Costs to Increase Following Approval of Mid-Year Cost Hike Filing

From PA Chamber of Business & Industry

On Dec. 27, the Pennsylvania Department of Insurance announced its approval of the Pennsylvania Compensation Rating Bureau’s unprecedented mid-year loss cost increase filing, with a Feb. 1 effective date. The filing was prompted by the state Supreme Court’s decision last year in the Protz v. Workers’ Compensation Appeals Board case, which threw out Impairment Rating Evaluations. IREs, a feature of the workers’ compensation process since 1996, are conducted by physicians designated by the Department of Labor & Industry who utilize guidelines from the American Medical Association to assess an injured employee’s level of impairment in order to determine their disability status.  The Court’s holding was essentially based on a technicality and led to an overall change in loss costs of +6.06 percent.

At the time the decision was handed down, the PA Chamber warned its members that workers’ compensation cost hikes in 2018 would be a likely result. In fact, in September the PCRB testified to the House Labor and Industry Committee that the overall impact on employers that carry workers’ comp insurance policies is expected to be at least $165 million – and that total doesn’t even account for employers who self-insure, meaning that the impact will likely be far greater.

Legislation has since been introduced to address the decision and stave off cost increases. In a statement issued following the Dept. of Insurance’s approval of the rate hike, PA Chamber President Gene Barr issued a statement that called for the timely approval of the bills to help mitigate the impact of the increases. “The PCRB’s filing and the Department of Insurance’s subsequent approval clearly demonstrate the need for swift legislative action,” Barr said. “The PA Chamber is strongly urging the General Assembly to act on H.B. 1840 or companion legislation in the Senate, S.B. 963 – legislation to reinstate the impairment rating evaluation process with the Supreme Court’s concerns addressed.”