THE INDUSTRIAL COMMISSION OF
ARIZONA

2003 ANNUAL REPORT

2003 ANNUAL REPORT
THE INDUSTRIAL COMMISSION
OF ARIZONA

Chairman
Jean Pierre Angelchick, M.D.
Vice Chairman
James B. Whitten
Commissioner
Brian C. Delfs
Commissioner
Louis W. Lujano, Sr.
Commissioner
Joe Gosiger
Larry Etchechury, Director

TABLE OF CONTENTS

INTRODUCTION ............................................................................................................................... 1
LABOR DEPARTMENT ..................................................................................................................... 2
CLAIMS DIVISION ............................................................................................................................ 3
ADMINISTRATIVE LAW JUDGE DIVISION (ALJ) ...................................................................... 4
ARIZONA DIVISION OF OCCUPATIONAL SAFETY AND HEALTH (ADOSH) ....................... 5
SPECIAL FUND ................................................................................................................................. 7
LEGAL DIVISION .............................................................................................................................. 9
DIVISION OF ADMINISTRATION ................................................................................................ 11
CURRENT EVENTS ......................................................................................................................... 14
CHARTS............................................................................................................................................ 15

INTRODUCTION
over the processing of workers’ compensation
claims. Since that time, the role of the Industrial
Commission has been expanded to cover other
labor related issues such as occupational safety
and health, youth employment laws, resolution
of wage related disputes, vocational rehabilitation,
workers’ compensation coverage for claimants of
uninsured employers, insolvent insurance carriers
and self-insured employers.

The Industrial Commission of Arizona
(ICA) is a regulatory agency that was created in
1925 as a result of legislation implementing the
constitutional provisions establishing a workers’
compensation system.
From 1925 to 1969, the workers’
compensation system consisted of the State
Compensation Fund, which was then a part of
the Industrial Commission, and self-insured
employers which generally were the mining and
the railroad companies. In 1969 the workers’
compensation system was reorganized and
expanded to include private insurance companies.
The State Compensation Fund was split off from
the Industrial Commission and established as a
separate agency responsible for providing
workers’ compensation insurance coverage. The
Industrial Commission retained its responsibility
as the file of record and its regulatory authority

The policy setting body for the ICA is a
five member Commission whose members are
appointed by the Governor and confirmed by the
Senate to staggered five year terms. The
Commission oversees an Agency with
approximately 308 employees and an operational
budget of approximately $16.1million. As a nongeneral fund agency, the Industrial Commission
is funded by an annual tax on workers’
compensation premiums that cannot exceed 3%.
The tax rate for 2002 was 2.75% and for 2003 is
3%.

The mission statement of the Industrial
Commission is to efficiently administer
and effectively enforce all applicable laws
and regulations not specifically delegated
to others, relative to the protection of life,
health, safety and welfare of employees
within the State. Its purpose and
objectives are accomplished through seven
major divisions which are set out
separately in this document.

1

RESOLUTION OF WAGE DISPUTES

LABOR DEPARTMENT
Orlando Macias, Director

When a wage owed to an employee is no
more than $2,500 and the accrual of those unpaid
wages do not exceed one year, then an employee
may file a wage claim with the State Labor
Department or with the Small Claims Court.
Upon receipt of a claim, the Labor Department
will notify the employer of the claim and
investigate the allegations. The Labor Department
will provide a written determination which can
be appealed to Superior Court. An employer who
does not comply with a Final Order within ten
days after the Order becomes final is liable to pay
the employee treble the amount of the unpaid
wages found to be owed. While every effort is
made to resolve the dispute, in some cases there
is insufficient information to make a
determination. In those cases, a claimant has the
right to file a civil action in Justice or Small
Claims Court.

The Labor Department is a Department
that has had a dramatic change in responsibilities
over the years. For example, in the 1930’s, it was
responsible for establishing minimum wages,
hours of operations for the railroads, and later
enforced the payment of appropriate wages on
public works projects within the state. Today, the
Labor Department essentially conducts 99% of
its activities in three specific areas: youth
employment law enforcement, resolutions of
disputes involving wages, and regulating private
employment agencies that charge fees to
applicants (these include placement agencies,
career counseling firms, modeling and talent firms
and sitting services).
YOUTH EMPLOYMENT LAW ENFORCEMENT

Arizona’s youth employment laws, which
establish the hours a youth can work and prohibit
occupations in which they can be employed, are
very similar to those on the federal level. The
Labor Department utilizes information gathered
from the ICA’s Claims Division to review and
investigate workers’ compensation claims
involving minors, receives and investigates
information from other governmental
organizations and complaints filed by the public.
FY01

FY02

FY03

NUMBER OF
INJ URY REPORT S
INVOLVING MINORS
AND COMPLAINT S
RECEIVED

1488

1500

1162

NUMBER OF
YOUT H
EMPLOYMENT
VIOLAT IONS
COMFIRMED

112

86

42

NUMBER OF
WAGE CLAIMS
FILE/INVESTIG
ATED

FY 01

FY 02

FY 03

2918

3196

3153

LICENSED & REGULATED AGENCIES

Under Arizona law, private employment
agencies that charge a fee to an applicant are
licensed and regulated by the Labor
Department.The Industrial Commission’s
Employment Advisory Council and the Labor
Department investigate the background of each
firm applying for a license. Based on their
investigation, they recommend approval or denial
of a license to the Commission. The Industrial
Commission administratively approves or denies
the license. An appeal of that administrative
decision is made before the five member
Commission through an administrative hearing.
The Commission’s decision is appealable to the
Superior Court.
2

The Claims Division, in addition to
answering approximately 150,000 telephone
inquiries per year, is responsible for processing
approximately 6,000 documents per day and
making in excess of 31,000 determinations
annually that are subject to judicial review. Some
of those determinations involve a variety of issues
such as allegations of bad faith, awards for facial
scaring and loss of teeth, approvals or denials of
requests to leave the state, approvals or denials
of requests to change physicians, etc. A historical
perspective for some of those determinations are
as follows:

Number of Licensed Agencies

Career
Counseling Firms
Model & Talent
Agencies

FY01

FY02

FY03

24

25

25

22

21

21

General Agencies

6

4

3

Sitter Agencies

3

3

3

Domestic Help
Agencies

2

1

1

Nurses Agencies

1

1

1

Total

58

55

54

CLAIMS DIVISION
Noreen Thorsen, Manager

AVERAGE MONTHLY WAGE AWARDS

Unlike the other Divisions, the historical
role of the Claims Division has remained
unchanged. Since 1925, the Claims Division has
been the file of record for approximately 6 million
workers’ compensation claims files. Claims are
received by the Claims Division from attending
physicians and injured workers. The Claims
Division, in turn, notifies the appropriate
insurance carrier/third party processing agent or
self-insured employer so that they can
appropriately process the claim. The historical
number of claims processed in the last three years
are as follows:
Number of
Claims
Processed

FY01

FY02

FY03

152145

138839

131702

The Claims Division establishes the
average monthly wage for claimants who have
been injured in excess of seven days. The number
of wage awards for the last three fiscal years are
as follows:

Number of
Wage Awards

FY01

FY02

FY03

18341

16585

15641

LOSS OF EARNING CAPACITY AWARDS

The Claims Division is responsible for
determining the “loss of earning capacity” (LEC)
for claimants who have incurred a permanent
impairment that results in an unscheduled injury.
The number of “LEC” awards for the past three
fiscal years are as follows:

In addition to being a file of record, we now have
24 million stored documents on our optical disc
system. The Claims Division is responsible for
ensuring that the 550 insurance carriers/third party
processors and 125 self-insured employers
process workers’ compensation claims in
accordance with existing statutes and rules.

Number of
LEC Awards

3

FY 01

FY 02

FY 03

2864

3720

2976

The Commission’s ability to effectively
monitor claims activity and process the large
volume of data has been due in large part to the
Commission’s computer system. In 1991 the
Claims Division became the first state workers’
compensation program to utilize optical disk
technology and go to a paperless system. This
technology, which is used in conjunction with new
computer software, allows for greater productivity
and instant access to claims information. With
this system, more than one person can access a
file at the same time, and telephone inquiries can
be answered immediately. Based upon the ICA’s
Claims Division’s success, a number of other
states have adopted this technology.

ADMINISTRATIVE LAW JUDGE
DIVISION (ALJ)
Harriet Turney, Chief Judge
The ALJ Division is authorized to conduct
hearings and resolve legal disputes in the areas of
workers’ compensation, occupational health and
safety (OSHA), and youth employment. The ALJ
Division’s mission is to resolve all disputes coming before it in an efficient and equitable manner.
The vast majority of cases referred to the division
are in the area of workers’ compensation.
Fully staffed, the division employs 17 ALJs
in Phoenix and five in Tucson. All ALJs are appointed by members of the Industrial Commission.
They must be active members of the State Bar of
Arizona and have a minimum of five years experience in workers’ compensation, labor and employment law, or a related field. Each ALJ is supported by a legal secretary, who assists in the administration of the judge’s docket and provides
information and assistance to parties, attorneys and
the public. The division is also supported by clerks
in both offices.

The Chief ALJ is responsible for assignment of cases, the administration of the division
and supervision of all personnel. The Chief ALJ
maintains a reduced case load. A Vice Chief ALJ,
who works on special projects and has a full case
load, is posted in Phoenix. In Tucson, the ALJin-Charge is responsible for day-to-day operations,
in addition to handling a full case load.
Workers’ Compensation cases are referred
to the ALJ Division when an interested party
(claimant, employer, insurance carrier or Special
Fund) requests a hearing. OSHA cases are referred
to the division when an employer protests an action taken by the Arizona Division of Occupational
Safety and Health (ADOSH).
Once a case is referred to the division, it is
assigned to an ALJ who sets it for hearing, usually within 60 days. This allows the parties to
conduct discovery in preparation for the hearing
and to explore settlement possibilities. Most hearings are held in either Phoenix or Tucson. However, parties may request that a hearing be held
elsewhere around the state and the ALJs travel to
such locales as Flagstaff, Prescott, Lake Havasu,
Kingman, Yuma, Lakeside-Pinetop, Payson,
Globe, Casa Grande, Bisbee, Sierra Vista and
Nogales.
Workers’ compensation cases often require
numerous hearings to obtain all necessary evidence. There are no juries in cases in the ALJ Division. The ALJs perform the function of a jury
in that they make factual findings and credibility
determinations. Written decisions containing the
ALJs findings, conclusions and analysis are issued
in all cases. A party disagreeing with the decision
in a workers’ compensation case may file a request for review which goes to the same ALJ who
heard the case. Upon receipt of legal memoranda
setting forth the parties’ arguments, the ALJ issues a Decision Upon Review which may affirm,
reverse, modify and/or supplement the original
decision.

4

If a party disagrees with the Decision Upon Review, the party may file a Petition for Special Action in the Arizona Court of Appeals. The Court
of Appeals must either affirm the ALJ’s decision
or set it aside; it has no authority to modify the
decision.
OSHA cases are generally concluded in a
single session. Review of OSHA cases is slightly
different than for workers’ compensation cases. An
OSHA decision is not reviewed by the ALJ who
issues it; rather the case is referred to a Review
Board. Then, as in a workers’ compensation case,
further review is to the Court of Appeals.
The ALJ Division’s mediation program has
been in operation for approximately two years.
Offered on a voluntary basis as an alternative to
the formal hearing process, mediation offers the
parties a means, through a third party neutral, to
work toward a mutually acceptable resolution of
their issues. Mediation has been shown to be effective in crafting solutions that might not otherwise be available in the hearing process. While
the majority of mediations have been in workers’
compensation cases, mediation has also been used
successfully to resolve OSHA disputes. Attorneys
in the Legal Division advise all OSHA respondents
about the availability of mediation as an alternative to the hearing process.
Mediation is a confidential procedure.
When mediation is requested, the case is referred
to one or two ALJs who serve as mediator or comediators. If the dispute is resolved, the parties
prepare a compromise and settlement agreement
or a stipulation that is referred to the ALJ who had
been assigned to hear the case. If the dispute is not
resolved, the case is returned to the hearing process. The ALJ assigned to mediate the case destroys all memoranda and notes from the mediation. The ALJ who presides over the hearing renders a decision based solely on record and evidence
presented at the hearing.
The ALJ Division is committed to reducing turnaround time. With the cooperation of the
legal community, certain types of cases are being
set sooner than 60 days. Continuances are granted
only for good cause.

Hearings for medical witnesses in workers’ compensation cases are often held telephonically in
order to reduce costs and expedite completion of
the hearing process. The medical community has
reacted favorably to this accommodation to their
busy schedules as it reduces their travel time and
lost productivity. The parties appreciate that telephonic hearings can cut weeks off the hearing process. Additionally, informal conferences are being utilized to explore settlement early in the hearing process, and to explain basic rights and responsibilities to unrepresented workers. Other timesaving measures are being explored.
FY01

FY02

FY03

Cases Referred to the
Division

8186

8405

8685

Hearings Conducted

7497

7704

7382

Average Length of
Time to resolve a Case
(Days)

118

125

134

ARIZONA DIVISION OF
OCCUPATIONAL SAFETY AND
HEALTH
Darin Perkins, Director
In 1974 Govenor Jack Williams asserted
Arizona’s right, under the Federal Occupational
Safety and Health Act, to retain jurisdiction over
occupational safety and health issues within our
state, excluding mining operations, Indian
reservations and federal employees.
This
jurisdiction
encompasses
approximately 2.2 million employess working in
114,000 public and private establishments. In
accordance with the Federal Occupational Safety
and Health Act, the Arizona Division of
Occupational Safety and Health (ADOSH) operates
under an approved plan with the U. S. Department
of Labor. In 1985 the U. S.Department of Labor
designated (ADOSH) as being one of only 23 states
that have programs that are “as effective” as Federal
OSHA.
5

Given the large scope of respopnsibility,
ADOSH focuses its efforts in four specific areas:
compliance, consultation, elevators and boilers.
COMPLIANCE

ADOSH’s compliance activities consist of
conducting unannounced inspections of workplaces
throughout Arizona to determine whether
employers are complying with the Occupational
Safety and Health Act and standards.
Inspections may be the result of (1) a work
related accident, (2) a complaint, (3) a referral,
(4) planned inspection, or (5) a follow-up to
ensure that previously cited serious, repeat or
willful violations have been corrected.
Inspections involving work related accidents are
generally serious in nature involving multiple
injuries or a fatality. A complaint inspection
generally is the result of a serious safety/health
allegation or a nonresponse to a written inquiry
sent to an employer by ADOSH. A referral
generally comes from another government source
such as Department of Economic Security’s
Farmworker Outreach Program, Department of
Health Services, Police and Fire Departments.
Planned or scheduled inspections are those
directed at those employers who have what
appears to be a large number of workers’
compensation claims, or higher than average
injury and illness rates.
ADOSH is the only state or Federal OSHA
program in the country that has an independent
body, (the Commission) that is separate from the
OSHA program, that reviews the appropriateness
of ADOSH’s penalty proposals and either
approves, modifies or disapproves the issuance
of penalties for violations of Arizona’s
Occupational Safety and Health Act.

Every Thursday at a public meeting before
the Commissioners, a representative from
ADOSH presents a prima facie case to the
Commissioners as to why a penalty should be
assessed. The Commission, as a body, reviews
the proposal and either approves, modifies or
disapproves the proposed penalties based upon
the facts presented. All penalties assessed and
collected go directly to the State General Fund.
FY 01

FY 02

FY 03

Serious Willf ul
and Repeat
Violations

583

805

866

Total Penalties
Assessed*

$1.6

$1.74

$1.51

*in millions

It is important to note that not all
violations or inspections result in penalties. In
fact, the majority of violations are other than
serious and carry no penalty. In addition, for a
significant number of inspections we find no
violations and determine that the employer is “in
compliance” with the Arizona Occupational
Safety and Health Act.

Nonserious
Violations
In compliance
% Rate

FY01

FY02

FY03

1045

1717

2267

38.3%

43.6%

59.7%

CONSULTATION AND TRAINING

ADOSH’s consultation activities consist
of providing free consultative assistance to
employers who are requesting assistance in
coming into compliance with existing
occupational safety and health standards.

6

At the request of an employer, a consultation
evaluation may involve an individual operation or
an entire workplace. No citations or penalties are
issued to employers utilizing consultation services
as long as the employer corrects the apparent hazards
which are noted as written recommendations in a
letter to the employer.
Free training programs are also provided by
ADOSH to business organizations, labor
organizations and individual employers upon
request. A film library is also available to individual
employers who may wish to check-out films to
supplement their own safety and health programs.

FY01

FY02

FY03

Boilers Inspected

2565

3200

3381

Deficiencies
Noted

716

648

602

FY01

FY02

FY03

Elevators
Inspec ted

4794

5300

5398

Deficiencies Noted

1861

2053

1890

SPECIAL FUND
FY01

FY02

FY03

#of Hazards Found
During
Consultations

1943

2089

1723

# of Training
Programs

620

1496

357*

# of Employees
Trained

2915

5488

4226

# of Employers
Trained

3170

4007

3414

David Sosa, Special Fund Monitor
The Special Fund is a “trust fund” that was
legislatively created in 1969 for the express purpose of providing workers’ compensation benefits
in the following areas:

*In FY03 ADOSH began recording the # of training programs differently. T his year,
began counting only eac h separate c ours e taught. Prior to FY03, we counted each
separate employer in attendanc e as a s eparate clas s . For example, if ten employe
were presented in a c las s, it was counted as ten programs taught.

Unlike the Arizona Occupational Safety and
Health Act, the Boiler and Elevator program is
equipment oriented, and not based upon employee
exposure. As a result, cease and desist orders are
utilized without monetary penalties. Once violations
are corrected, certificates of operation are issued
allowing the employer to utilize the boiler, elevator
or escalator.
In the Boiler and Elevator statutes, political
subdivisions are allowed to retain jurisdiction if they
provide a comparable program. The City of Phoenix
has retained jurisdiction over elevators within its
boundaries. No other political subdivision has
retained jurisdiction for boilers or elevators.

7

♦

providing benefits for uninsured claimants,

♦

continuing workers’ compensation benefits
for claimants of insolvent carriers and
bankrupt self-insured employers,

♦

partial coverage of workers’ compensation
benefits for second injury claims,

♦

vocational rehabilitation benefits,

♦

continuing medical benefits for pre 1973
workers’ compensation claimants.

Functionally, the responsibilities of the
Special Fund have historically been relatively
stable. The only significant changes that have
occurred dealt with the financing of the Special
Fund and the creation of an oversight Investment
Committee in 1984.

The Investment Committee reviews the tax rate
each year and has set the tax rate at 0% again for
2003.

The financial integrity of the Special Fund
is overseen by a legislatively created Investment
Committee. This Investment Committee consists
of a representative from the insurance industry, a
representative of the investment industry, a
representative of the self insured employers, the
Chairman and Director of the Industrial
Commission.

UNINSURED CLAIMS

The Special Fund is a $245 million fund
which is comprised of investment property, the
Industrial Commission offices at 800 W.
Washington, Phoenix and 2675 E. Broadway,
Tucson, and a mix of bonds, stocks and cash.
Because of the Special Fund’s conservative
investment strategy, its portfolio consists of 67%
bonds, 31% stocks and 2% cash. The Special
Fund’s rate of return, over the past four years has
ranged from 5.0% for FY00, 1.5% for FY01, 4.4%
for FY02 and 7.5% for FY03. The rate of return
since the inception of this investment program
has been 9.2%.
The funding source of the Special Fund
has changed dramatically over the years.
Originally there were two funding sources: the
amount unexpended from a fixed 3% tax on
workers’ compensation premiums and an
additional discretionary workers’ compensation
premium tax of 2% After a legislative change in
1993, the source of funds is now based upon the
Special Fund’s investment income and a
discretionary tax of 1.5% which has been 0%
since 1992.

Some examples of operational statistics and their
financial impact are as follows:

The Special Fund is responsible for
providing benefits to injured workers whose
employers are violating the law and not providing
workers’ compensation insurance (no-insurance
claims). The historical number of no-insurance
claims and the annualized cost for those claims
are as follows:

No-Insurance
Awards Issued

FY01

FY02

FY03

3184

3986

2954

INSOLVENT INSURANCE CARRIERS

The Special Fund is responsible for
continuing workers’ compensation benefits for
those claimants insured by insolvent insurance
carriers. Four insurance carriers became insolvent
in FY03.
The estimated reserve for those claims are as
follows:
15% fee to State Compensation Fund
Mission Insurance
Mission National Insurance
Enterprise Insurance Company
Employers Casualty Insurance Company
Western Employers Insurance Company
Carriers Insurance Company
Montgomery Wards
Idea Mutual
American Mutual

The Special Fund’s retained earnings are
presently at $31.0 million at the end of FY03.
8

13.0 million
4.9 million
9.1 million
.2 million
.6 million
2.4 million
.2 million
.2 million
.2 million
.07 million

Rockwood Insurance
Credit General Insurance Compan
Southwest Supermarkets
Relience Insurance
HIH America
Great States
Superior Pacific
Superior National
Paula Insurance
Western Growers Insurance
Villanova Insurance
Legion Insurance
S & H Insurance

.11 million
.3 million
.6 million
14.1 million
1.4 million
12.1 million
.9 million
5.0 million
10.4 million
.5 million
.5 million
6.3 million
.2 million
83.3 million

This training includes a variety of college courses
to supplement prior education, on the job training
where the special fund will pay 50% of the salary
during training as long as there is a commitment
to hire the trainee, and a variety of vocational
programs including: graphic artist, meat cutting,
respiratory therapy, nursing, computer aided
drafting, medical assistants, and pharmacy
technicians. For those that are eligible for
vocational rehabilitation but are lacking skills to
enter a program, the Special Fund offer
foundational training in math, reading, and
English (ESL) .

VOCATIONAL REHABILITATION

A workers’ compensation claimant who
as a result of the worker’s injury has incurred a
permanent impairment that prevents that worker
from returning to the worker’s date of injury
employment and who also has a loss of earning
capacity may be eligible for vocational
rehabilitation benefits.
In 1988 the Commission enhanced its
existing vocational rehabilitation efforts by
establishing a specific program for injured
workers with scheduled injuries. The historical
statistics related to this issue are as follows:

# of
Rehabilitation
Awards Issued

FY 01

FY 02

FY 03

94

121

150

Our rehabilitation program is focused on
providing vocational retraining that will result in
meaningful employment.

LEGAL DIVISION
Laura McGrory, Chief Counsel
The Industrial Commission has always
had its own legal representation, separate from
the Attorney General’s Office. In its early years,
the Legal Division functioned in a dual role as
both hearing officers and legal counsel.
With the creation of the Administrative
Law Judge Division in 1969, the responsibilities
changed and remain the same today. The Legal
Division represents the Industrial Commission in
the majority of legal matters affecting the Agency.
The major responsibilities of the Division are as
follows:
♦

9

Represents the Special Fund in actual/
potential litigation involving most
activities of the Special Fund, i.e.
uninsured workers’compensation claims,
second injury claims, supportive care,
and, on occasion, claims involving
insolvent carriers/bankrupt self-insured
employers.

Represents the Arizona Division of
Occupational Safety and Health in
actual/potential litigation regarding the
enforcement of the Arizona
Occupational Safety and Health Act.

♦

♦

Represents the Labor Division in the
enforcement of youth employment
matters and wage claim appeals and the
regulation of employment agents under the Labor
Department’s jurisdiction.

♦

Represents the agency in personnel matters.

♦

Provides legal advice to the five member
Commission and Division Managers.

♦

Represents the agency in personnel matters.

♦

Provides legal advice to the five member
Commission and Division Managers.

♦

Assists Division Managers in the promulgation
of rules.

♦

Ensures that Arizona’s employers are providing
workers’ compensation insurance coverage for
their employees.

♦

Initiates subrogation of third party no-insurance
claims.

♦

Operates a program for processing and collection
of delinquent accounts.

A historical perspective of some of the
activities of the Legal Division are as follows:
Hearings/Legal
Proceedings
Involving Special
Fund and Az Div
of Occupational
Safety and
Health Cases

FY01

FY02

FY03

396

386

401

INSURANCE COVERAGE

The Legal Division is notified through a
variety of sources of those employers who are
violating Arizona law by not providing workers’
compensation coverage for their employees. The
Legal Division investigates each referral and
ensures that insurance is obtained.

Insurance
ref errals

FY01

FY02

FY03

1428

1780

2509

COLLECTIONS

The Legal Division is notified when
monies owed as a result of Arizona Division of
Occupational Safety and Health citations or
uninsured workers’ compensation claims are
delinquent. The collection of delinquent accounts
is either addressed in-house or with outside
collection counsel.

Collection
Referrals

10

FY01

FY02

FY03

415

433

584

The Legal Division is also involved in a
variety of miscellaneous legal matters, e.g.
ADOSH discrimination cases, Superior Court
injunctive activities, attorney fee petitions and
certifications of records to the Court of Appeals.

The Division pays compensation within
three days and medical service providers are paid
within fourteen days from receipt of billing. A
historical perspective of the number of warrants
is provided:

DIVISION OF ADMINISTRATION

Checks
Issued

FY 01

FY 02

FY 03

14130

16355

20580

Glenn Hurd, Manager
The Division of Administration was
created to provide support services necessary to
ensure the efficient and effective operation of the
Industrial Commission. The Division provides
the following services:
1.
2.
3.
4.
5.
6.

Budgeting
Accounting
Data Processing
Purchasing
Facilities Management
Workers’ Compensation Statistical
Reporting
7. Ombudsman’s Office for Workers’
Compensation
8. Printing and Mailing Services
9. Personnel Services
10. Processing & Evaluation of
Applications for Self Insured
Employers
11. Federal Grant Administration

OMBUDSMAN

In 1988 the Industrial Commission’s
Ombudsman’s Office was created by statute to
provide assistance to injured workers in resolving
difficulties encountered during the processing of
their workers’ compensation claims. The
Ombudsman’s Office intercedes on behalf of an
injured worker to ensure that the worker receives
benefits to which the worker is entitled under the
law. Personnel in the Ombudsman’s Office do
not provide legal advice nor do they participate
in legal proceedings. A historical perspective of
the number of claimants that have received
assistance are listed as follows:

Number of
Claimants
Assisted

A more detailed explanation of some of the
services provided by the Division are as follows:

FY01

FY02

FY03

5119

5602

3785

DATA PROCESSING
ACCOUNTING SERVICES

In addition to payment of operational
claims and purchase orders, the Division is
responsible for prompt payment of monthly or
semi-monthly payment of compensation and
medical benefits provided to those injured
workers receiving benefits under the Special
Fund.

In 1991 the Industrial Commission’s
Claims Division became the first state workers’
compensation system in the country to utilize
optical disk imaging. The system works in
conjunction with a large sophisticated data
software program that has provided the agency
the mechanism for an agency wide claims system.

11

The Commission’s Data Processing Section has
converted all existing systems to an agency wide
PC based UNIX system utilizing HP servers that
will utilize the optical disk imaging technology,
and will begin the process of integrating the ALJ,
Special Fund and Legal systems into the optical
disk imaging system.
We are continuing to develop an employer
master file to be shared by all Divisions of the
agency. This system will contain current
information on Arizona employers including
address, workers’ compensation insurance
coverage, number of employees and other data
needed to assist the agency tracking Arizona
employers. Also, we are in the process of rewriting
the Claims Data Base System for processing of
claims and the Hearing Data Base for processing
of workers compensation hearings.

12

CURRENT EVENTS
The focus of the Industrial Commission’s efforts
this year continues to be in looking at our internal
operations to ensure that we are efficiently meeting our statutory mandates and at the same time
to deal with other issues through the regulatory
and legislative process.
Internally one of the continuing problems associated with workers compensation claims processing is the amount of time it takes to resolve an
issue in dispute. On the one hand are the constitutional “due process” requirements that are required and on the other is the necessity to resolve
issues in dispute so that employees, legitimately
injured on the job, can receive the medical and
indemnity benefits that they are statutorily entitled
to in a timely fashion. This constant tug and pull
has allowed some cases to be resolved in a rather
timely fashion and others to take what seems to
be an inordinate amount of time. The Commission is committed to addressing this issue and has
been interviewing doctors and attorneys and surveying other states in the hopes that an equitable
solution can be found.

13

Last year, with the passage of the Commission’s
legislative package, problems associated with
timely processing of claims in which the employer
was not insured were addressed. This significant
piece of legislation will hopefully address what has
been a significant problem to those non- insured
claimants. I want to take this opportunity to thank
all those that had a part in the passage of this legislation.
From a regulatory standpoint we are looking at resolving regulatory packages that have been in development for several years. By Commission
policy regulatory issues particularly those issues
in conflict are to be resolved if possible before the
regulatory process is initiated. This mandate requires the Commission staff to work with the community to define the issues and to work diligently
in attempting to resolve those issues in conflict.
Many meetings with the parties have occurred and
many drafts of these proposed regulations have
been submitted to the community for comment. I
expect that this year we will see the rule packages

CHARTS

14

CHART 1. TAXABLE WORKERS COMPENSATION
PREMIUMS REPORTED (IN MILLIONS)
ON A CALENDAR YEAR BASIS* (1998 - 2002)
$700
$600

$570
$494

$493

$500
$432

$400

$589

$567

$425
$365

$440

$367

$300
$200

$142

$128

$127

1999

2000

$142

$149

2001

2002

$100
$0

1998

INSURANCE CARRIERS
SELF-INSURED EMPLOYERS
TOTAL
*PREMIUMS WRITTEN LESS RETURNED PREMIUMS, DIVIDENDS, CANCELLED
PREMIUMS

15

CHART 2.DIRECT LOSSES PAID (IN MILLIONS) ON A
CALENDAR YEAR BASIS. (1998 - 2002)
500
$413
400

$375
$344
$313

$360

300 $291

$402

$380
$303

$327

200

100

0

$69

$61

1998

1999

$69

$77

$75

2000

2001

2002

INSURANCE CARRIERS
SELF-INSURED EMPLOYERS
TOTAL

16

158359
158008

1999

156353

2000

2001

147377

2002

137099

CHART 3. TOTAL COMPENSATION CLAIMS FILED WITH THE INDUSTRIAL
COMMISSION
(calendar year)

180
160
140
120
100
80
60
40
20
0

1998

17

CHART 4. TOTAL TIME LOST CLAIMS FILED WITH THE
INDUSTRIAL COMMISSION (1998 - 2002)
(calendar year)

25

Thousands

20842

20039

20

19752

19095
17298

15

10

5

0

1998

1999

2000

18

2001

2002

CHART 5. LOST WORKDAY CLAIMS 1999-2002
by MAJOR INDUSTRY DIVISION
Thousands

5

4

3

1999
2000
2001
2002

2

1

Agriculture, forestry

bl
e
ifi
a

ce
s
rv
i

ss
la
N
on
-c

e,
Fi
na
nc

Se

in
s

ur
a

nc
e

de
et

R

sa

le

ai
lT
ra

Tr
ad
e

io
n
at
or
t
W
ho
le

tu
rin
g

Tr
an
sp

ac

on
s
C

Major Industry Division

M
an
uf

tr
uc
ti o
n

in
in
g
M

A
gr
ic

ul
tu
re

,f

or
es

tr

y

0

1999

2000

2001

2002

629

581

583

606

Mining

187

126

146

132

Construction

3148

3118

2969

2767

Manufacturing

1530

1462

1396

1226

Transportation

1727

1689

1501

1483

Wholesale Trade

981

936

808

695

Retail Trade

2896

2736

2669

2660

Finance, insurance

320

314

338

345

Services

3944

3816

3722

3619

Non-classifiable

117

244

251

117

INCLUDES ALL PRIVATE SECTOR LOST WORKDAY CLAIMS THAT WERE RECEIVED DURING
CALENDAR YEARS 1999, 2000, 2001 and 2002.

19

CHART 6. LOST WORKDAY CLAIMS 1999-2002
by NATURE
6
5
4

1999
2000
2001
2002

3
2
1

th
er
O

ct
ur
C
es
ut
s,
la
ce
ra
Br
tio
ui
ns
se
s,
co
nt
us
io
ns
H
ea
tb
ur
ns
C
he
m
ic
al
bu
rn
s
Am
pu
ta
tio
ns
M
ul
tip
C
l
e
ar
In
pa
ju
lt
rie
un
s
ne
ls
yn
dr
om
e
Te
nd
on
ite
s

Fr
a

Sp
r

ai
n

s,
st
ra

in
s

0

NATURE

1999

2000

2001

2002

Sprains, strains

5422

5142

4934

4795

Fractures

1585

1501

1398

1413

Cuts, lacerations

1220

1114

1212

1072

Bruises, contusions

898

941

889

795

Heat burns

189

187

161

162

Chemical burns

38

38

30

34

Amputations

182

169

143

110

Multiple Injuries

1160

1055

831

708

Carpal tunnel syndrome

189

165

157

139

Tendonites
Other

92

101

91

46

4541

2795

4531

4379

INCLUDES ALL PRIVATE SECTOR LOST WORKDAY CLAIMS THAT WERE RECEIVED DURING
CALENDAR YEARS 1999, 2000, 2001 and 2002.

20

CHART 7. LOST WORKDAY CLAIMS 1999-2002
by PART OF BODY
7
6
5

1999
2000
2001
2002

4
3
2
1

PART OF BODY

er
th
O

M
ul
tip
le

ne
e
K

e
A

nk
l

t
ris
W

k
B
ac

k
N
ec

H

ea
d

0

1999

2000

2001

2002

HEAD

602

634

597

617

NECK

238

178

196

197

BACK

3119

2950

2825

2603

WRIST

84

770

756

681

ANKLE

622

617

574

598

KNEE

1574

1540

1552

1575

MULTIPLE

1886

1794

1482

1232

OTHER

6641

6569

6405

6150

INCLUDES ALL PRIVATE SECTOR LOST WORKDAY CLAIMS THAT WERE RECEIVED DURING
CALENDAR YEARS 1999, 2000, 2001 and 2002.

21

CHART 8. LOST WORKDAY CLAIMS 1999-2002
by EVENT OR EXPOSURE
5
4

1999
2000
2001
2002

3
2
1

an

er
th
O

ul

ts
,

vi
o

xp

le

lo

nt

si
o

ac
ts

ns

ts
en
s,
e

re

ac
ci
d

Ex
po

se

d

Tr

As
sa

sp
o

rt a

tio

n

su
fu
l
rm

ep
to

Fi

bs
ta

m
ot

io

nc
es

n

n
e
et
iv

ve

ha

Fa

R

ll

to

O

Sl

re
x

ip
s,

er

tri
p

tio

s

l
ve
le

sa

m
e

w
er
lo

lt
o

Fa
l

C

on

ta
c

tw
it h

ob

je

le
v

ct

el

0

EVENT OR
EXPOSURE

1999

2000

2001

2002

Contact with object

3865

3691

3395

3368

Fall to lower level
Fall to same level
Slips, trips
Overexertion
Repetive motion

1429
2012
268
4321
550

1340
1944
275
4129
536

1321
1987
285
3951
556

1123
1928
283
3939
407

Exposed to harmful
substances

307

319

271

261

817

817

729

673

54

52

50

56

Assaults, violent acts

255

247

226

253

Other

1638

1702

1616

1362

Transportation
accidents
Fires, explosions

INCLUDES ALL PRIVATE SECTOR LOST WORKDAY CLAIMS THAT WERE RECEIVED DURING
CALENDAR YEARS 1999, 2000, 2001 and 2002.

22

CHART 9. LOST WORKDAY CLAIMS 1999-2002
BY SOURCE
Thousands

4

3

1999
2000
2001
2002

2

1

O

FU
R
N

C

C
H

EM

IC

A
LS

,C
H
EM

IC

A
L

PR

O
D

U
C
TS
N
TA
IN
IT
U
ER
R
S
E,
FI
XT
U
R
ES
M
A
PA
C
PE
H
R
IN
TS
R
ER
SO
&
Y
N
M
S,
A
TE
PL
FL
R
A
O
IA
N
O
TS
LS
R
,G
&
A
R
N
O
IM
U
N
A
D
LS
SU
R
FA
C
H
ES
A
N
D
TO
O
LS
VE
H
IC
LE
S
A
LL
O
TH
ER

0

SOURCE

1999

2000

2001

2002

CHEMICALS, CHEMICAL
PRODUCTS

124

125

94

86

CONTAINERS

1944

1927

1739

1807

FURNITURE, FIXTURES

472

475

459

452

MACHINERY

1060

992

977

912

PARTS & MATERIALS

1877

1731

1653

1491

PERSONS, PLANTS &
ANIMALS

3064

3107

2991

2718

FLOOR, GROUND
SURFACES

3613

3571

3597

3327

HANDTOOLS

979

939

876

867

VEHICLES

1462

1285

1207

1204

ALL OTHER

931

906

795

789

INCLUDES ALL PRIVATE SECTOR LOST WORKDAY CLAIMS THAT WERE RECEIVED DURING
CALENDAR YEARS 1999, 2000, 2001 and 2002.

23

CHART 10. LOST WORKDAY CLAIMS 1999-2002
by OCCUPATION
7
6
5

1999
2000
2001
2002

4
3
2
1

uc

rs
O

ab
fa
b

tio

ric

n,

at
or

cr
af

s,
l

t,
r

th
e

s
or

ai
ep

hi
,f
is
try
es
fo
r
g,
Pr

ec

O

is
i

pe

on

ra

pr

to
r

s,

od

rm
in

ch
n
Te

er

rs

ng

e
rv
ic
Se
Fa

ic
al

M
an

,s

al

ag

er

ia

es
,a

l,

pr

dm

in

of
es

su
p

si
o

po

na

rt

l

0

OCCUPATION

1999

2000

2001

2002

Managerial,
professional

873

838

935

896

Technical, sales,

2115

2124

2090

1924

Service

2375

2234

2053

2066

Farming, forestry,
fishing

650

591

609

629

Precision
production, craft

3573

3371

3504

3503

Operators,
fabricators

5844

5599

5011

4535

86

295

185

100

Others

INCLUDES ALL PRIVATE SECTOR LOST WORKDAY CLAIMS THAT WERE RECEIVED DURING
CALENDAR YEARS 1999, 2000, 2001 and 2002.

24

CHART 11. LOST WORKDAY CLAIMS 1999-2002
by AGE
5

4

1999
2000
2001
2002

3

2

1

ov
er

64

an
d
65

55

to

54
to
45

35

to

44

34
25

20

to

24
to

19
to
16

15

an
d

un
de
r

0

AGE

1999

2000

2001

2002

15 and under

9

8

7

9

16 to 19

510

512

433

384

20 to 24

1679

1658

1419

1357

25 to 34

4071

3820

3603

3220

35 to 44

4481

4403

4056

3925

45 to 54

3085

2972

3062

2987

55 to 64

1340

1327

1421

1380

65 and over

248

277

317

341

INCLUDES ALL PRIVATE SECTOR LOST WORKDAY CLAIMS THAT WERE RECEIVED DURING
CALENDAR YEARS 1999, 2000, 2001 and 2002.

25

CHART 12. DISTRIBUTION OF FATAL OCCUPATIONAL
INJURIES BY EVENT OR EXPOSURE
ARIZONA, 1999-2002
35
30
25
1999
2000
2001
2002

20
15
10
5

O

TH

ER

TS

R
A

W
O

R

K
ER

A

ST
R

IR
C

U
C

K

FT

B
Y

Y
B
U
C
K
ST
R

IN
C
ID
EN

H
IC
VE

O

B

LE

FA
LL
S

C
T

ID
IC
H
O

M

ID
IN
C
H
IG

H
W

A
Y

JE

ES

EN
TS

0

EVENT

1999

2000

2001

2002

HIGHWAY INCIDENTS

14

25

20

26

HOMICIDES

14

10

19

18

STRUCK BY OBJECT

12

11

11

6

FALLS

3

14

9

10

WORKER STRUCK BY
VEHICLE

4

5

8

11

AIRCRAFT INCIDENTS

6

31

4

9

OTHER

17

22

25

21

SOURCE: CENSUS OF FATAL OCCUPATIONAL INJURIES, INDUSTRIAL COMMISSION OF ARIZONA

26

CHART 13. DISTRIBUTION OF FATAL OCCUPATIONAL
INJURIES BY INDUSTRY DIVISION
ARIZONA, 1999-2002
35
30
25

1999
2000
2001
2002

20
15
10
5

INDUSTRY DIVISION

TH
ER

T

E

O

N
M
EN
R
VE
O
G

IL
ET
A
R

SE

R

VI
C

TR
A
D

ES

R
E
U
LT
U
R
IC
G
A

O
SP
TR
A
N

C
O

N

ST
R

U
C

TI
O

R
TA
TI
O

N

N

0

1999

2000

2001

2002

CONSTRUCTION

21

21

15

20

TRANSPORTATION

13

15

10

25

AGRICULTURE

8

3

6

4

SERVICES

7

17

13

7

RETAIL TRADE

7

9

16

15

GOVERNMENT

9

30

12

18

OTHER

5

23

15

12

SOURCE: CENSUS OF FATAL OCCUPATIONAL INJURIES, INDUSTRIAL COMMISSION OF ARIZONA

27

CHART 14. DISTRIBUTION OF FATAL OCCUPATIONAL
INJURIES BY AGE
ARIZONA, 1999-2002
35
30
25

1999
2000
2001
2002

20
15
10
5

R

4

N
D

O

55

VE

-6

4
45

-5

4
35

-4

4
-3
25

24

65

A

A

N
D

U
N

D
ER

0

AGE

1999

2000

2001

2002

24 AND UNDER

9

19

10

5

25-34

18

22

22

26

35-44

18

29

22

27

45-54

10

21

16

31

55-64

12

18

11

8

65 AND OVER

3

9

6

4

SOURCE: CENSUS OF FATAL OCCUPATIONAL INJURIES, INDUSTRIAL COMMISSION OF ARIZONA

28