Workers' Compensation and Disability Benefits: The Effect of the Permanent Partial Disability Multiplier and Settlement Method on Back Injury Claims in the State of Tennessee

Back pain is the leading cause of work place disability in Tennessee. The National Council on Compensation Insurance (NCCI, 2002) found that in the United States back claims account for thirty-two (32%) percent of all workers' compensation claims and the average cost of a back claim is roughly fifty (50%) percent higher than the cost of other work-related injuries. Previous research on Tennessee workers' compensation suggests that permanent partial disability benefits (PPD) are a major source of cost and litigation in a court based system (Gardner, Telles, & Moss, 1996; Boden, 1997; Ballantyne, 2003).

The workers' compensation system in Tennessee is a court based system. Trial courts have full discretion in determining the amount of permanent partial disability (PPD) awards. Workers' compensation claims may be settled under the following methods: (1) trial; (2) settlement approved by court - complaint filed; (3) settlement approved by court - complaint not filed; and (4) settlement approved by the Tennessee Department of Labor & Workforce Development.

Permanent partial disability (PPD) awards for back injuries are dependent upon whether the employer returned the employee to work after injury.¹ Permanent partial disability (PPD) indemnity benefit costs in Tennessee can be greatly influenced by the magnitude of the permanent partial disability multiplier (PPDM) (Garnder, Telles, & Moss, 1996; Boden, 1997; Ballantyne, 2003). The use of multipliers to assign permanent partial disability (PPD) indemnity benefits is unique and utilized only by Tennessee (Gardner, Telles, & Moss, 1996; Boden, 1997; Ballantyne, 2003).

A previous published study on Tennessee reported that permanent partial disability (PPD) awards for low back injuries vary among judicial districts and that the application of the multipliers may be one of the causes of variation in awards (Boden, 1997). Previous research has not investigated whether permanent partial disability (PPD) awards for back injuries vary by the method of settlement.

This study investigated the Tennessee workers' compensation system to determine if benefit variation existed among settlement methods for back injury claims. Workers' compensation claim data from 2000-2003 was obtained from the Tennessee Department of Labor & Workforce Development. Regression analysis was used to determine whether there was a significant difference between group means using a p value of .05.

The settlement method found to have the greatest influence on permanent partial disability (PPD) awards in return-to-work and a non-return-to-work claim was trial. A claim resolved at trial was found to be four percent (3.729%) more in permanent partial disability (PPD) indemnity benefits paid when compared to settlements approved by the Tennessee Department of Labor in return-to-work claims and eleven percent (11.406%) more in non-return-to-work claims.

Employees with a work-related back injury claim had a forty-three percent (43.5%) probability of having surgery. Of the employees who had back surgery, sixty-one percent (61.3%) were able to return-to-work with their pre-injury employer.