Report No. 2008-57
September 2008
Complete Audit Report

Improvements Could Be Made To Missouri's Workers' Compensation System
The Department of Labor and Industrial Relations, through its Division of Workers' Compensation (the division), has responsibility for overseeing the state's workers' compensation system. Because of the importance of the workers' compensation system, we focused review efforts on determining (1) the impact of 2005 legislative changes to the workers' compensation system, (2) the adequacy of the medical rating process and the timeliness of benefit payments, and (3) whether other administrative improvements are needed in the system.

Full impact of 2005 legislation not yet known
Legislative changes enacted in 2005 have impacted Missouri's workers' compensation system. The number of workers' compensation cases filed by injured workers and premiums paid by employers decreased in 2006 and 2007. Benefit costs per covered employee declined significantly in 2006 and increased slightly in 2007. However, due to prior downward trends in the frequency of injuries and other factors, the full impact of the 2005 legislative changes is not yet known. (See page 11)

Guidance to injured workers eliminated
As a result of the 2005 legislation, injured workers are no longer provided limited legal guidance by division personnel to help ensure they are getting fair settlements. As a result of the law change, unrepresented claimants have been placed at a disadvantage. Since the new legislation has been in effect, settlements paid to unrepresented claimants have decreased by 14.3 percent. In addition, this legislative change may contribute to an increase in attorney involvement. (See pages 13 and 14)

Medical rating process not providing consistent and predictable results
Missouri's medical rating process has not provided consistent and predictable results for injured workers. Missouri, unlike most states, uses an unstructured approach to the medical rating process. In addition, benefits have not been provided to injured workers in a timely fashion. As a result, injured workers incur delays in getting benefits and may increase attorney involvement. (See pages 17 through 20)

Administration of system could be improved
The number of non-compliance investigations and referrals to the Attorney General have decreased. The amount of fines collected has also decreased. In addition, injury reporting violations have not been monitored or referred for prosecution. Changes are needed in state law to allow the division to base administrative fund tax and surcharge rates on future costs. Without a change to state law, the division cannot adequately plan for future expenditures. Improvements are needed to ensure the accuracy and completeness of the division's database system. (See page 23)

Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov