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Struggling state comp agencies

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Assessments the Workers' Compensation Division in Oregon depends on to fund comp services and safety programs have suffered sharp declines because of unemployment, the state agency warned last week.

As a result, 13 Oregon WCD workers received notifications in late April that they would lose their jobs, the agency said in a memo to insurers, self-insured employers, third-party administrators, employers, and attorneys.

It also said the “layoffs are primarily in areas where workload has decreased or where we have identified opportunities for streamlining.”

Perhaps, but as reported today in a Business Insurance story available here, employers say cuts to state work comp programs are impacting their ability to resolve claims. Oregon provides another example of states having to cut back their work comp services.

Like many other state comp agencies, Oregon's WCD oversees a claims dispute appeals unit, enforces compliance, investigates fraud, certifies managed care organizations, and administers return-to-work programs among many other functions.

In an April 21, budget update Oregon's WCD said the loss of construction and manufacturing jobs in the state has been particularly tough on its budget. Those jobs generate more comp premiums and assessments than, say, clerical professions.

Comp insurers are similarly feeling the job loss.

Fortunately, a poll of economists set for release today says they expect U.S. business growth to pick up in the year ahead.

While employers say state comp agency comp cuts are now impacting claims resolution, the recession also means there should be less claims to process. But many of the claims just now hitting state comp courts, for example, resulted from injuries that occurred before the recession.

We will now have to wait and see how staff reductions at state comp agencies across the country impact employers and workers as an expanding economy presumably increases the number of claims in the system.

Perhaps the current lull in claims generated because of the recession will give state agencies time to realign.