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Pennsylvania Workers’ Compensation Annual Report Shows Changing—and Challenging—World for Workers’ Compensation Practices

It is cliche at this point to say the practice of law is changing at a breakneck pace. But having practiced law for as long as I have—going on four decades—rarely a day goes by where I don’t encounter some advancement in technology, some innovative marketing technique, or some cutting-edge management theory that makes me shake my head in amazement about how fast our industry is moving.

While it is important for us lawyers to stay abreast of the changes in the legal industry, it is crucial that we stay abreast of the changes in society that impact the people who turn to us for legal services. Some legal practices, like cruise ship personal injury practices and other travel-based practices, saw demand bottom out during the worst of the COVID-19 pandemic. Others, like high-volume car accident personal injury practices or DUI practices, are seeing a slow but consistent decrease in demand thanks to ride-sharing services—aside from any dip in demand they saw thanks to the pandemic. That demand might further decrease when autonomous cars are more commonplace and if federal legislation requiring breathalyzers in cars becomes law.

The workers’ compensation bar is not immune from these societal changes. Advances in technology have long been cited as an existential threat to workers’ compensation practices across Pennsylvania and the nation. The thinking goes that as more technology, including automation, comes to the workplace, fewer workers will be needed to complete the tasks once exclusively handled by humans. And, because of this technology and the improvements in safety it will likely bring, the remaining human workers will be less likely to get injured, thus reducing the number of workers’ compensation claims that could be filed.

But interestingly, many of the eye-opening statistics in the 2020 Pennsylvania Workers’ Compensation and Workplace Safety Annual Report (“WC Annual Report”), released last quarter by the Pennsylvania Department of Labor & Industry, Bureau of Workers’ Compensation, reflect a changing workers’ compensation landscape that cannot be exclusively chalked up to advances in technology. Instead, the statistics reflect the unmistakably changing faces of injured workers in Pennsylvania.

These changing faces bring with them challenges to workers’ compensation practices across the commonwealth. These challenges are every bit as existential a threat as technology. But unlike technology, the trend causing these challenges is already fully formed and making waves. As a result and in order to keep up, today’s workers’ compensation practices will need to look different from those of merely a few years ago.

With that in mind, here are thirteen statistics from the WC Annual Report, grouped by the big-picture story they tell, that jump out as indications that the market for workers’ compensation lawyers in Pennsylvania is changing—and becoming more challenging.

The number of injuries are decreasing, and the majority of them tend to be relatively minor

Statistic #1: In 2020, 147,918 injury and illness cases were reported, down 24,838 (14.4%) from the number reported in 2019.

This statistic shows advances in technology are keeping Pennsylvania’s workplaces safer than in previous years. Safer workplaces mean fewer injured workers. That’s great for those workers and society generally. But for legal practices built to serve injured workers, fewer injured workers means more competition for a shrinking pool of potential clients.

Dating back to 2014’s 177,317 reported injury and illness cases, 2020’s drop in cases reflects a year-over-year drop of 16.6% during that time. In other words, 2020 is continuing a half-decade-plus trend of fewer cases.

It is tempting to attribute the sizable drop in reported cases to COVID-19 closing workplaces for varying lengths of time in 2020. However, according to the WC Annual Report, there were more than 20,000 COVID-19-related claims filed in 2020. There likely was a much higher number of COVID-19-related cases in 2020 than those 20,000 claims since many reported injuries/illnesses do not become filed claims.

As a result, we can assume the increased number of COVID-19-related cases at least cancelled out reported cases that did not arise because of pandemic-related closures. And yet, even after accounting for COVID-19, there was a significant drop in reported cases.

Statistics #2 & #3: Sprain/strain injuries (51,050 cases) accounted for the highest percentage (34.5%) of total cases reported in 2020. The next highest was contusions, crushing, and bruising injuries (17.5%).

Statistics #4 & #5: Overexertion (lifting, pulling, pushing, etc.) was the leading cause of injury during 2020 with 38,322 injuries (25.9% of all injuries). Being struck by objects (falling, flying, etc.) was the next leading cause of injury, with 27,387 cases reported (18.5% of all injuries).

Statistics #2–#5 show that relatively minor injuries are the most prevalent kinds of injuries (although, obviously, “crushing” injuries are typically not minor). As a result, the values of workers’ compensation cases with those injuries are going to be lower on account of minimal missed time from work and minimal medical bills. Again, that’s great for society. But few workers’ compensation law firms are equipped to provide exceptional client service and legal counsel at a volume needed to run a profitable firm where a significant number of cases involve these minor injuries and thus will likely yield relatively low attorneys’ fees.

The people getting injured are not necessarily the injured worker of yore

Statistic #6: More than half of reported injuries and illnesses in 2020 (86,857 cases) occurred in two categories: Education & Health Services (45,113 cases; 30.5% of all cases) and Trade, Transportation & Utilities (41,744 cases; 28.2% of all cases).

Statistics #7 & #8: The injury rate per 1,000 workers increased from 28.4 in 2019 to 30.0 in 2020. The highest increase was in the Leisure & Hospitality Services category (28.3%), followed by Trade, Transportation & Utilities (8.0%).

Statistics #6, #7, and #8 show that relatively speaking, more injuries are occuring in sectors that are not traditionally targeted by workers’ compensation firms. Yes, workers in the Trade, Transportation & Utilities category tend to be marketed to by workers’ compensation firms. But the same cannot be said for workers in the Education & Health Services or Leisure & Hospitality Services categories. To keep up, workers’ compensation firms will need to invest time and money to reorient their marketing and client service operations to better attract and engage with workers who may have different values and life experiences than those of “traditional” injured workers. If these firms do not, they risk losing market share to those firms that can make such investments.

Statistic #9: The ten industries with the highest rate of injuries and illness per 1000 in 2020 were:

  • Building material & garden supply stores (111 injuries/illness per 1000)
  • Air transportation (92.2 per 1000)
  • Couriers & messengers (76.8 per 1000)
  • Primary metal manufacturing (63.6 per 1000)
  • Truck transportation (57.5 per 1000)
  • Warehousing & storage (56.1 per 1000)
  • Non-metallic mineral product manufacturing (55.5 per 1000)
  • Nursing & residential care facilities (55.5 per 1000)
  • Food manufacturing (55.2 per 1000)
  • Wood product manufacturing (55 per 1000)

Piggybacking off of the takeaway from Statistics #6–#8, the takeaway from Statistic #9 is that in order to appeal to workers in the industries with the highest rates of injury and illness, workers’ compensation firms must implement robust marketing programs that can simultaneously cast a wide net while also appearing to speak directly to workers in specific industries. This is a significant undertaking that few workers’ compensation firms and their outside marketers will be able to pull off successfully.

Statistic #10: The six age groups that had the highest percentages of injuries were:

  • 25-29 – 12.1%
  • 30-34 – 11.2%
  • 55-59 – 10.7%
  • 50-54 – 10.6%
  • 35-39 – 9.8%
  • 45-49 – 9.8%

Statistic #10 builds on the takeaways from Statistics #6–#9. Workers’ compensation firms won’t just have to appeal to people with different occupations than those that firms historically targeted—they’ll also have to appeal to different age groups. With a full third of injured workers under the age of 39, workers’ compensation firms will need to recalibrate their marketing and client service operations to reach and connect with younger clients through the communications mediums they prefer. This will be a significant investment in time and money that many firms will be unable or unwilling to make.

Statistic #11: Fifty-one percent of workers injured in 2020 reported their gender as male. Forty percent reported as female. Nine percent did not report their gender.

The upshot of Statistic #11 is that male-dominated workers’ compensation firms with few women partners and executives may find they will need to employ more female attorneys and staff to build connections with female clients, and tweak their marketing and client service operations to reach those clients. Otherwise, female clients will gravitate toward firms that do.

There are increasing pressures on the resolution of cases

Statistic #12: In 2020, the Workers’ Compensation Office of Adjudication conducted 8,095 mediations statewide, producing 3,328 settlements for a success rate of 41.1%.

Based on our firm’s proprietary data, mediations are becoming increasingly common in workers’ compensation cases across the commonwealth. When viewed from a client’s perspective, it is easy to see why. Clients often prefer the certainty and less-adversarial environment provided by mediation. For that reason, they may be willing to reduce the amount of damages they’re seeking in exchange for the prompt resolution of their claims. Of course, mediated recoveries tend to be lower than recoveries secured through litigation. As a result, as clients increasingly seek to mediate their claims, and the Office of Adjudication’s success rate increases thanks to injured workers being more willing to resolve their claims during mediation, the legal fees workers’ compensation firms are entitled to may decrease, posing a threat to their bottom lines.

Statistic #13: Of the total compensation commercial insurance carriers paid in 2019 (the most recent year covered by the WC Annual Report), 51.5% was indemnity compensation ($1,076,135,978) and 48.5% was medical compensation ($1,013,587,983).

This statistic serves as a stark reminder to workers’ compensation lawyers that the success of their practices and firms are dependent upon their ability to successfully battle insurance companies. But it is an unfair fight. Insurers continue to invest in technology and other efficiencies they can leverage to quash workers’ compensation claims. Most workers’ compensation firms are unable to make comparable investments that would allow them to litigate as effectively as insurers can. As a result, they and their clients may only be able to secure relatively small recoveries which, again, pose a threat to their firms’ bottom lines.

A glimpse into the murky future of workers’ compensation practices in Pennsylvania

Today, there is no shortage of threats to the continued vitality and profitability of law firms. But while many lawyers fret about technological advancements and non-lawyer ownership of law firms, the WC Annual Report provides workers’ compensation lawyers with a different set of concerns.

The faces of injured workers in Pennsylvania are changing while the number of injured workers is shrinking. This should, rightfully, cause some soul-searching within workers’ compensation firms across the commonwealth. Are their lawyers and staff ready and willing to transform their operations and marketing to appeal to a more diverse but smaller potential pool of clients?

Perhaps the more pressing question is whether they are prepared for what could happen to their firms if they are not ready and willing to transform. Few will thrive. Some will squeak by. But most will likely share the same destiny as those firms and other businesses that came before them that failed to adapt to the changing world around them.

Jerry M. Lehocky is a founding partner of Pond Lehocky Giordano LLP, the largest workers’ compensation and Social Security disability law firm in Pennsylvania. He can be contacted at jlehocky@pondlehocky.com.

Reprinted with permission from the November 30, 2021 edition of  The Legal Intelligencer © 2021 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com.

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