COMPACT

The Newsletter for Workers’ Compensation Professionals May 2001

Minnesota Department of Labor and Industry

443 Lafayette Road N.
St. Paul, MN 55155
Inside ...
Articles
DLI Web site medical fee schedule
updates .............................................. 4
Assigned Risk Plan surplus; settlement
opportunities for SCF cases .................... 5
More than $3 million of reimbursements
unclaimed ............................................ 5
Assault-injury indemnity claim numbers
level since 1997 ................................... 6
Musculoskeletal-disorder claims
in Minnesota ........................................ 8
New work comp poster available ............. 10
Payment of permanent partial disability
in lump sum ......................................... 11
Voc Rehab unit statistics, 1997-1999 ....... 12
Attorney costs in the workers’
compensation system ............................ 15
Rehabilitation provider professional
conduct and accountability outcomes ...... 21
Roy v. Gas Supply, Inc. – summary
to date ............................................... 24
Notices of request for comment .............. 43
COMPACT is a publication of the Minnesota Department of Labor
and Industry. Its purpose is to provide department news and workers’
compensation case information to professionals who work within
Minnesota’s workers’ compensation system.
Correspondence should be sent to: COMPACT editor, Minnesota
Department of Labor and Industry, 443 Lafayette Road N., St. Paul,
MN 55155; by e-mail at DLI.Communications@state.mn.us.
Subscription requests should be sent to Customer Assistance
Publications, Workers’ Compensation Division, 443 Lafayette Road
N., St. Paul, MN 55155; by e-mail at DLI.brochure@state.mn.us.
Visit www.doli.state.mn.us/compact.html to view this publication
on the Web.
Upon request to the editor, COMPACT will be made available in
alternative formats such as Braille, large print or audiotape.
Tables
Number of injuries due to assaults ........... 6
Number of assault indemnity claims for
selected industry groups ........................ 7
MSD indemnity claims ............................ 8
Types of MSDs, 1999 indemnity claims ..... 9
Industry of MSD claimants among 1999
indemnity claims ................................... 9
Occupation of MSD claimants among
1999 indemnity claims ........................... 10
Voc rehab plans closed 1997-1999 [1] ..... 13
Voc rehab plans closed 1997-1999 [2] ..... 14
Defense attorney costs by
six-month interval ................................. 16
Fees to attorneys compared with associated
service fees by six-month interval ........... 17
Insurer/defense attorney fees ................ 18
SCF reimbursements and assessments ..... 25
Forms
Annual Statement of Defense Attorney
Fees ................................................... 19
Level 1 Adjuster Training, Day 1 .............. 35
Level 1 Adjuster Training, Day 2 .............. 37
Publications order form .......................... 39
‘Rule 101’ order form ............................. 41
Summaries of decisions
Workers’ Compensation Court
of Appeals ........................................... D-1
Minn. Supreme Court decisions................ D-23
Attorney costs in the workers’ compensation system
By Carolyn MacDonald, Research Analyst
Research and Statistics

In the decades since the inception of the workers’ 1992 through 1997, the most recent year for which this
compensation program, formal resolution of disputes data is available.
among parties has resulted in a body of case law that
affects outcomes of current disputes about workers’ The balance of this article presents information about
compensation matters. Although recent reforms to attorney fees and related legal defense costs2 reported
workers’ compensation laws have aimed at increasing by insurers and self-insured employers, referred to in
the proportion of disputes that can be resolved informally, total as “defense attorney fees.” Concern about rapidly
many disputes continue to be heard by judges at increasing workers’ compensation costs in the early
proceedings where attorneys represent disputing parties. 1990s resulted in reforms that included the reporting of
Important reasons for this include: defense attorney fees for the first time. This was in order
to measure the extent to which defense attorney fees
1) responsibilities under current law may be unclear while contribute to overall system costs. Defense attorney fee
consequences of the injury or illness may be serious; data for both insurers and self-insured employers first
became available beginning with the second half3 of 1994.
2) some types of injuries, such as injuries with a lengthy
period of onset, can involve interpretations of Defense attorney costs
complicated combinations of legal precedents; Total annual defense attorney fees ranged from $46
million to $52 million between 1995 and 1999, the most
3) one or more parties to a dispute may be reluctant to recent year for which data is available. Trend data is
participate in informal dispute resolution, preferring the presented in Figure 1 (see page 16). Defense attorney
finality of a judge’s ruling. fees decreased between 1994 and the first half of 1996,
returned to their 1994 levels by the first half of 1998,
Under Minnesota statute, claimant attorney fees are and then decreased again. Reported estimated fees per
calculated as a percentage of the benefits awarded and injury generally decreased during the entire period.
may be a lien against these benefits. Claimant attorney
fees are regulated and have historically been reported to Fees to attorneys, associated service costs
the department on required claims forms. Trend data Defense attorney fees reported for the second half of
about claimant attorney fees, beginning in 1984, is 1994, were $27.1 million. Of this, $7.6 million, or 28
reported annually in the Workers’ Compensation percent, represents legal defense costs other than attorney
System Report. The most recent (1999) system report fees. The most substantial among these costs is
indicates the percentage of indemnity claims with claimant independent medical examinations. By the first half of
attorney fees was 10 percent in 1984, rose to a high of 2000, the proportion of total defense attorney fees paid
17 percent in 1991, and declined to 15 percent in 19971. for other legal defense costs increased to 51 percent.
Average claimant attorney fees as a percentage of The relationship between attorney fees and other legal
average associated indemnity benefits has increased defense costs is shown in Figure 2 (see page 17). Fees
gradually from nine percent in 1984 to 12 percent in to attorneys have generally decreased over time, while
1997. Total claimant attorney fees as a percentage of other costs have fluctuated in the range of $6 million to
total indemnity benefits for all claims, at five percent in $10 million.
1984, remained at slightly more than seven percent from
Attorney costs, continued on page 16

1
Data is “developed,” meaning the numbers are projected to what is expected to be full claim maturity. Most current data available is 1997.
2
Related legal defense costs includes deposition and other expert-witness fees, investigative costs related to litigated cases, medical report
fees, file and chart copy fees, court filing fees, transcript costs, and travel and mileage costs paid in connection with litigated cases.
3
Defense attorney fee data is reported by the attorney’s fiscal year, in half-year segments. Fees paid to attorneys and associated service
costs are itemized separately.
COMPACT 15 May 2001
Attorney costs, continued from page 15
Comparison of defense, claimant attorney fees which means they are associated with injuries that may
Information about claimant attorney fees and defense have occurred in any year. Nevertheless, general
attorney fees is collected differently. Claimant attorney comparisons can be made.
fees are reported to the Department of Labor and
Industry (DLI) on a per-claimant basis and are reported Generally, defense attorney fees were more than twice
in the Workers’ Compensation System Report as as much as claimant attorney fees from 1995 through
developed costs for claims by year of injury. Defense 1997, the years for which both data series are available.
attorney fees are reported according to the year paid, This relationship is illustrated in Figure 3 (see page 18).

Figure 1
Defense attorney cost
by six-month interval
July 1, 1994 - June 30, 2000
Millions
$40 4,000

$30 3,000

$20 2,000

$10 1,000

$0 0
II-94 I-95 II-95 I-96 II-96 I-97 II-97 I-98 II-98 I-99 II-99 I-00
Defense attorney fees
Estimated fees per injury

Defense
attorney Estimated Estimated
fees number of fees per
Half-year (millions) injuries injury
II-94 $27.1 16,603 $1,635
I-95 26.2 16,426 1,595
II-95 23.0 21,502 1,068
I-96 22.3 23,464 949
II-96 24.1 29,297 823
I-97 22.9 29,298 780
II-97 24.2 25,051 965
I-98 27.3 32,577 839
II-98 24.8 39,236 635
I-99 24.9 39,227 635
II-99 23.1 35,503 651
I-00 23.2 36,286 639

COMPACT 16 May 2001

 Figure 2
Fees to attorneys compared with other legal defense costs
by six-month interval
July 1, 1994 - June 30, 2000
Millions
$25

$20

$15

$10

$5

$0
II-94 I-95 II-95 I-96 II-96 I-97 II-97 I-98 II-98 I-99 II-99 I-00
Fees to attorneys
Other legal defense costs

Other
legal
Fees to defense
attorneys costs
Half-year (millions) (millions)
II-94 $19.5 $7.6
I-95 18.0 8.2
II-95 16.6 6.3
I-96 16.4 5.9
II-96 16.4 7.7
I-97 15.4 7.5
II-97 16.3 7.9
I-98 16.9 10.4
II-98 15.7 9.1
I-99 16.3 8.6
II-99 15.2 7.9
I-00 15.3 7.9

Attorney costs, continued on page 18

COMPACT 17 May 2001

Attorney costs, continued from page 17

Figure 3
Defense attorney fees, 1995-1999,
compared with claimant attorney fees, 1995-1997

Millions
$60

$40

$20

$0
1995 1996 1997 1998 1999
Claimant attorney fees
Defense attorney fees

Defense Claimant
attorney attorney
fees fees
Year ($millions) ($millions)
1995 $49.2 $19.6
1996 46.4 21.8
1997 47.1 20.6
1998 52.1
1999 48.6
Source: DLI Statement of Attorney Fees database and DLI claims
database.

COMPACT 18 May 2001