THE INDUSTRIAL COMMISSION OF ARIZONA

2011 ANNUAL REPORT

David Parker

Chairman

Kathleen Oster

Vice Chair

John A. McCarthy, Jr.

Commissioner

Susan Strickler

Commissioner

Michael G. Sanders

Commissioner

Laura L. McGrory, Director

“The Spirit of Arizona,” Mural Painting by Robert T. McCall © 1987 Industrial Commission of Arizona as Trustee for the Special Fund

TABLE OF CONTENTS
I.

History of the Industrial Commission.………….…………………….………………………………1

II.

Commission Duties and Responsibilities…………………………….……………………………….2

III.

State of Programs……………………………………………………………………………………..3
A.

B.

C.

Occupational Safety and Health………………………………………………………………..3
1.

Compliance…………………………………………………………………………………3

2.

Consultation & Training……………………………………………………………………6

3.

Boilers & Elevators…………………………………………………………………………8

4.

Occupational Injury, Illness & Fatal Statistics………..…………………………………..10

Payment of Wages……………………………………………………………………………..12
1.

Resolution of Wage Disputes.……………………………………………………………..12

2.

Minimum Wage Law Enforcement………………………………………………………..12

Arizona Workers’ Compensation……………………………………………………………...14
1.

Claims Statistics……………………………………………………………………………14

2.

Rates, Premiums and Losses……………………………………………………………….17

3.

Injury & Illness Incident Rates………..…………………………………………………...19

4.

Special Fund Activity……………………………………………………………………...23

5.

Adjudication of Disputes…………………………………………………………………..26

6.

Compliance with Workers' Compensation Insurance Laws……………………………….29

D.

Youth Employment…………………………………………………………………………….31

E.

Licensed & Regulated Agencies……………………………………………………………….32

IV. State of the Commission……………………………………………………………………………..35
Appendix A: Arizona Occupational Injuries, Illnesses & Fatalities….…………………………………...36

HISTORY OF THE INDUSTRIAL COMMISSION
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 coverage.
The Industrial Commission retained its
responsibility as the file of record and its regulatory authority 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, minimum wage, vocational rehabilitation, and workers’
compensation coverage for claimants of uninsured employers, insolvent insurance carriers and selfinsured employers.
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. As a nongeneral fund agency, the Industrial Commission’s Administrative Fund is funded by an annual
assessment on workers’ compensation premiums that cannot exceed 3%. The Commission performs
its statutory duties and responsibilities through the seven major Divisions that are described in this
document.

1

Commission Duties and Responsibilities
The Industrial Commission is responsible for administering and enforcing laws and regulations
that relate to the protection of life, health, safety and welfare of employees within the State. These
laws are found in Title 23 of the Arizona Revised Statutes.
A five-member Commission is responsible for determining the policy of the Industrial
Commission of Arizona. Each Commissioner is appointed by the Governor to a five-year staggered
term. The Commissioners serve on a part time basis and meet regularly to conduct business.
In addition to establishing the policy of the Commission, the Commissioners also perform a
variety of other functions that include:


Approving the issuance of occupational safety and health citations with penalties in
excess of $2,500;



Approving the issuance of cease and desist orders and penalties for youth employment
law violations;



Promulgating agency rules;



Authorizing and approving renewal of the self-insurance authority for individual
employers and workers’ compensation pools;



Licensing of employment agencies, career counseling services, and talent and modeling
firms;



Reviewing the Arizona Workers’ Compensation Physicians’ and Pharmaceutical Fee
Schedule on an annual basis;



Approving penalties for employers who fail to provide workers’ compensation insurance
for their employees;



Acting on requests from injured workers to commute their permanent monthly workers’
compensation awards to lump sum amounts;



Acting on occupational safety and health discrimination complaints; and



Establishing the annual tax assessment rates on workers’ compensation premiums to fund
the Administrative Fund and Special Fund.

Commission meetings, except for Executive Sessions, are open to the public and subject to the
open meeting laws. The time and location of each meeting are published in the agenda for that
meeting. Agendas are published at least 24 hours in advance of each meeting and are available for
download on The Industrial Commission of Arizona website at http://www.ica.state.az.us/. Minutes
are kept of each meeting and are also available for download on this web site or by contacting the
Commission Secretary at (602) 542-4411.

.

2

STATE OF PROGRAMS
A. OCCUPATIONAL SAFETY AND HEALTH
In 1974, Governor 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 2.8 million employees working in 144,000 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 26 states and territories that have programs that are “as effective” as Federal OSHA.
ADOSH focuses its efforts in four specific areas: compliance, consultation, elevators and boilers.
1.

COMPLIANCE

ADOSH’s compliance sections focus on 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)
a planned or targeted effort, 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 is generally the result of a serious safety/health
allegation or an employer’s failure to respond to a written inquiry from ADOSH. A referral
generally comes from another government source such as the Department of Economic Security’s
Farm Worker Outreach Program, Department of Health Services, or police and fire departments.
Planned or targeted inspections are those directed at those employers in high-hazard industries or
who have 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 proposed citations and either approves, modifies or disapproves their issuance.
At a public meeting before the Commissioners, a representative from ADOSH presents a prima
facie case to the Commissioners as to why a citation should be issued. The Commission, as a body,
reviews the proposal and either approves, modifies or disapproves the proposed citations based upon
3

the facts present. Current Commission policy is to review all cases where there are citations with
penalties totaling more than $2,500.00. Penalties totaling $2,500.00 or less are approved by the
ADOSH Director. All penalties assessed and collected go directly to the State General Fund.
The following represent statistics related to citations issued by ADOSH during the applicable
state fiscal year:

Number of Compliance Inspections Conducted
1,600

1,417

1,447

1,494
1,397

1,400

1,276

1,200

1,000

895

800
600
400

200
0

FY05/06

800
700

FY06/07

FY07/08

FY08/09

FY09/10

FY10/11

Number of Serious, Willful and Repeat Violations Issued
777
754
711
674

600

500
400
300
200
100

0

FY07/08

FY08/09

FY09/10

4

FY10/11

Total Penalties Assessed
1,200,000

$1,040,000
$940,000

1,000,000

$768,330

800,000

$707,256

600,000
400,000
200,000
0

FY07/08

FY08/09

FY09/10

FY10/11

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

Number of Non-Serious Violations Issued
3,000
2,500

2,450
2,249

2,122

2,060

2,000
1,500
1,000
500
0

FY07/08

FY08/09

FY09/10

5

FY10/11

In-Compliance Rate
50%
45%

45%

44%

43.2%

40%
35%
30%

26.5%

25%
20%
15%
10%
5%
0%

FY07/08

2.

FY08/09

FY09/10

FY10/11

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. 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
DVD library is also available to individual employers who may wish to check-out DVD’s to
supplement their own safety and health programs. The following represent statistics related to
consultation services provided by ADOSH during the applicable state fiscal year:

6

Hazards Found During Consultation Surveys
3,500

3,204

3,000
2,500

1,784

2,000

1,374

1,500

1,068

1,000
500

0

FY07/08

FY08/09

FY09/10

FY10/11

Number of Training Programs Conducted
450

404

400
350

309

299

300
250

194

200
150
100
50
0

FY07/08

FY08/09

FY09/10

7

FY10/11

Number of Employees Trained
8,000

7,000

6,966
6,341

6,000

4,631

5,000
4,000

3,175

3,000
2,000
1,000
0

FY07/08

FY08/09

FY09/10

FY10/11

Number of Employers Trained
3,500

3,068
3,000
2,500

2,178

2,009

2,000

1,444

1,500
1,000

500
0

FY07/08

3.

FY08/09

FY09/10

FY10/11

BOILERS AND ELEVATORS

Unlike the Arizona Occupational Safety and Health Act, the Boiler and Elevator programs are
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
8

program. The City of Phoenix has retained jurisdiction over elevators within its boundaries. No
other political subdivision has retained jurisdiction for boilers or elevators.

Number of Boilers Inspected
5,000

4,291

4,500
4,000

3,304

3,500

3,092

3,000
2,500
2,000

1,615

1,500
1,000
500
0

FY07/08

FY08/09

FY09/10

FY10/11

Number of Boiler Deficiencies Identified
3,500

2,933

3,000

2,322

2,500

1,890

2,000
1,500

1,291

1,000

500
0

FY07/08

FY08/09

FY09/10

9

FY10/11

Number of Elevators Inspected
6,500
6,000
5,500
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0

5,847

6,041

FY07/08

FY08/09

5,612

5,790

FY09/10

FY10/11

Number of Elevator Deficiencies Identified
6,000

5,431

5,000
4,000

3,031

2,882

3,000

2,321

2,000
1,000
0

FY07/08

4.

FY08/09

FY09/10

FY10/11

OCCUPATIONAL INJURY, ILLNESS & FATAL STATISTICS

The Research and Statistic’s Division of the Industrial Commission of Arizona, in cooperation
with the U.S. Department of Labor, Bureau of Labor Statistics (“BLS”), annually conducts the
Census of Fatal Occupational Injuries (“CFOI”) and Survey of Occupational Injuries and Illnesses
(“SOII”). The CFOI covers all fatal injuries determined to be work-related according to the CFOI
criteria, regardless of industry or regulatory coverage of the establishment. Each fatality must be
substantiated by two independent sources, which include death certificates, workers’ compensation
reports, newspaper articles or medical examiners’ reports.
10

The Survey of Occupational Injuries and Illnesses is sent out to random employers throughout
Arizona from selected industries using the North American Industry Classification System
(“NAICS”). Employers are requested to provide work-related injury and illness information from
the OSHA Forms 300 and 300A. In cases involving a more severe injury, additional detailed
information will be requested for that particular injury or illness.
States are responsible for data collection, follow-up, and coding for both the Census of Fatal
Occupational Injuries and Survey of Occupational Injuries and Illnesses. The survey also requires
employers to report the annual average number of employees and total hours worked for all
employees. This information is used by the Bureau of Labor Statistics to provide National,
Regional, and State labor statistics.
In addition to the foregoing, the Research and Statistics Division also collects data from an
Industrial Commission database of Arizona workers’ compensation claims to prepare reports that
identify lost workday claims by major industry, nature of injury, body part injured, event or
exposure, source of injury, and occupation.
The information obtained from either the CFOI, SOII, or the Commission’s database can be
used to identify hazardous industries, occupations, and activities. It also can assist in the
development of safer workplaces and in the prevention of injuries. The injury and illness rates
calculated based on the most recent surveys are found on pages 19-22. Lost workday and fatality
statistics are found in Appendix A.

11

B.

PAYMENT OF WAGES

The Arizona Labor Department (“Department”) is responsible for the enforcement of
Arizona’s payment of wages and minimum wage law. See A.R.S. §23-350 et seq. and 23-363 et seq.
Information related to these areas is set forth below.
1.

RESOLUTION OF WAGE DISPUTES

When wages owed to an employee are no more than $2,500 and the accrual of those unpaid
wages do not exceed one year, an employee may file a wage claim with the Department. Upon
receipt of a claim, the Department will notify the employer of the claim and investigate the
allegations. The 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. A claimant also has the right to file their initial wage claim in the
appropriate Court.

Number of Wage Claims Filed
3,500

3,295

2,858

3,000

2,514

2,577

FY09/10

FY10/11

2,500
2,000

1,500
1,000
500
0

FY07/08

2.

FY08/09

MINIMUM WAGE LAW ENFORCEMENT

Arizona employers are required to pay employees no less than the minimum wage. Any
person may file an administrative complaint with the Department if they are not receiving the state
minimum wage or have been retaliated against for asserting any claim or right under the Arizona
Minimum Wage Act (“MW Act”). Upon receipt of an alleged violation, the Department will notify
12

the concerned employer and investigate the allegations. Civil penalties may be assessed for
violations of the MW Act. Upon determination that wages or penalties are due and unpaid to the
employee, the Department may obtain judgment and execution, garnishment, attachments, or other
remedies for collection. The Department will provide a written determination, which can be
appealed to the Administrative Law Judge Division of the Commission. The Department may
mediate and conciliate any dispute between the parties. Additional information regarding the
Arizona Minimum Wage and the minimum wage in effect for the current year may be found at the
Commission’s website at www.ica.state.az.us.

Number of Minimum Wage Complaints Filed
90

83

80
70
60

58

50
40

30

27

25

FY09/10

FY10/11

20

10
0

FY07/08

FY08/09

13

C. ARIZONA WORKERS’ COMPENSATION
Since 1925, the Industrial Commission of Arizona has been the file of record for all Arizona
workers’ compensation claims. To date, the Commission maintains records for over 6 million
workers’ compensation claims files, which translates to over 40 million documents being stored on
the Commission’s imaging system and up to 6,000 documents being processed per day.
Through its Claims Division, the Commission is actively involved in the processing of Arizona
workers’ compensation claims to ensure that insurance carriers, third party processing agents, and
self-insured employers (“payers”) are processing workers’ compensation claims in accordance with
Arizona law. This includes notifying the appropriate payer of any claim that is received by the
Claims Division from an attending physician or injured worker. This notification is done so that the
payer can appropriately process the claim. The “active involvement” of the Claims Division also
includes the making of determinations in an individual workers’ compensation claim. Numbering in
the thousands per year, these determinations can include a variety of issues such as the setting of a
worker’s average monthly wage, establishment of unscheduled permanent disability awards, awards
for facial scarring and loss of teeth, processing requests to leave the state and requests to change
physicians, and allegations of bad faith.
Through its Ombudsman’s Office and other Claims Division staff, the Commission answers
approximately 150,000 telephone/web inquiries per year. Though not providing legal advice, the
Ombudsman’s Office is available to provide assistance to claimants to ensure that they understand
the Arizona workers’ compensation system and process.
1.

CLAIMS STATISTICS

Number of Workers' Compensation Claims Filed
200,000
180,000
160,000
140,000

184,600
164,466
140,220
122,814

120,000

98,718

100,000

96,704

96,480

80,000
60,000
40,000
20,000
0

CY1994 CY2000 CY2007 CY2008 CY2009 CY2010 CY2011

14

Claims Frequency Per 100,000 Workers

6,753
5,376

5,147

4,541

Arizona

4,347

Colorado

Nevada

New Mexico

Utah

Source: Arizona State Advisory Forum, October 6, 2011, NCCI

Claims Frequency of Lost Time Claims Per 100,000
Workers
1,318
1,102

934

869

729

Arizona

Colorado

Nevada

New Mexico

Utah

Source: Arizona State Advisory Forum, October 6, 2011, NCCI

15

Number of Average Monthly Awards Issued

18,451

19,132
15,120

FY06/07

FY07/08

FY08/09

12,994

13,577

FY09/10

FY10/11

Number of Loss In Earning Capacity Awards Issued
2,661

2,420

2,410

2,382
2,262

FY06/07

FY07/08

FY08/09

FY09/10

16

FY10/11

2.

RATES, PREMIUMS AND LOSSES
Arizona Premium Rate Index per $100 of Payroll: $1.71 (eff. 1/01/2010)
2010 Ranking: 38 (14th lowest in country)
Percent of National Median ($2.04): 84%
$3.20
$3.00

$2.80
Range of Premium Rates

$2.60
$2.40

AZ Workers Compensation Premium Rate Per $100 of Payroll

$2.20
$2.00

$1.77

$1.80

$1.63

$1.73

$1.67

$1.71

2006

2008

2010

$1.49

$1.60

$1.40
$1.20

$1.00
2000

2002

2004

Source: Oregon Workers’ Compensation Premium Rate Ranking Summary Reports, Oregon Department of Consumer &
Business

Rate Changes in Arizona
10

8.4

7.9

8
6

4.5

4

4.5

5.2
4.1

2.4

2

0.6

0
-2

02

-4

-6

03

04

05

06

07

08

Jan 08 Oct 08 Jan 10 Jan 11 Jan 12
-2.8

-3.1
-4.2

-4.3

Arizona’s cumulative rate level change since October 2000: -13.1 %

17

CY Total Taxable Premium Written In Millions
1200

$1,059.30
$946.9

1000

$1,015.50
$864.4

$820.6
800

$773

$806

2010

2011

$566.1

$568.2

2010

2011

600
400
200

0

2005

2006

2007

2008

2009

CY Total Direct Losses In Millions
$558.7

$562.6

$524.6

$523.8

$519.4

$481.4

1999

2005

2006

2007

2008

18

2009

3.

INJURY AND ILLNESS INCIDENT RATES**
TRC: Total Recordable Cases-Rate per 100 Employees

National
AZ
CA
WA
OR
NV
NM
UT

Private Industry
3.5
3.3
3.7
4.8
3.9
3.8
3.7
3.4

State Gov't
4.6
3.0
5.9
5.1
3.2
4.7
5.1
2.0

19

Local Gov't
6.1
5.7
7.5
7.1
5.1
6.0
7.6
6.1

DART: Cases with days away from work, job transfer, or restriction-Rate per 100 Employees

National
AZ
CA
WA
OR
NV
NM
UT

Private Industry
1.8
1.7
2.1
2.4
2.2
1.9
1.9
1.5

State Gov't
2.3
1.5
3.0
2.1
1.8
1.3
2.6
.6

20

Local Gov't
2.6
2.4
3.5
3.2
2.3
2.5
2.8
1.4

Lost Time Rate: Cases with days away from work-Rate per 100 Employees

National
AZ
CA
WA
OR
NV
NM
UT

Private Industry
1.1
.9
1.1
1.6
1.5
1.1
1.2
.8

State Gov't
1.8
1.2
2.1
1.8
1.4
.6
1.5
.4

21

Local Gov't
1.8
1.2
2.2
2.7
1.6
1.6
1.3
.9

Restricted Rate: Cases with transfer or restriction -Rate per 100 Employees

National
AZ
CA
WA
OR
NV
NM
UT

Private Industry
.8
.7
1.1
.8
.8
.9
.7
.7

State Gov't
.5
.4
.9
.3
.4
.7
1.1
.2

Local Gov't
.8
1.2
1.3
.5
.7
.9
1.5
.6

**Source: Incident Rates from Tables 3, 6 & 7, Nonfatal Occupational Injuries and Illness by Industry, 2010, Bureau of Labor
Statistics

22

4.

SPECIAL FUND ACTIVITY

Serving as the “safety net” for the Arizona Workers’ compensation system, 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:






Providing benefits for uninsured claimants
Continuing workers’ compensation benefits for claimants of insolvent carriers and bankrupt selfinsured employers under A.R.S. § 23-966
Partial coverage of workers’ compensation benefits for second injury claims (apportionment)
Vocational rehabilitation benefits
Continuing medical benefits for pre 1973 workers’ compensation claimants

The Special Fund consists of monies from Special Fund assessments, property and securities
acquired by the use of monies in the Fund, interest earned on monies in the Fund, and other monies
derived from the sale, use or lease of property belonging to the Fund. Effective August 12, 2005,
unexpended Administrative Fund revenue surplus may be transferred to the Special Fund when the
Special Fund is not actuarially sound. The financial integrity of the Special Fund is overseen by a
legislatively created Investment Committee that was established in 1984 under A.R.S. § 23-1065.
a.

b.

Special Fund Assessment Rate and Revenue


Currently set at the maximum allowed by statute, the assessment rate for the Special Fund is
2.5% for calendar year 2012. This rate includes the 1.5% assessment authorized under A.R.S. §
23-1065(A), the ½% assessment authorized under A.R.S. 23-1065(F), and the ½% assessment
authorized under A.R.S. § 23-966. Revenue generated for CY 2011:



Historical Perspective of Special Fund Rates:
1993 to 2003:
zero
2004:
1.5%
2005 to 2007:
2.5%
2008 and 2009:
1.5%
2010:
2.5%
2011:
2.5%

Special Fund Actuarial Picture


Total liabilities estimated as of 6-30-11: $465.5 million (a decrease of approx. $5.1 million from
prior year)



Special Fund total assets as of 6-30-11: $451.4 million (an increase of approximately $34.1
million from prior year)
23



c.

Actuarial deficit estimated as $14.1 million with a 75% confidence level (a decrease of
approximately $39.2 million).

Processing of No Insurance Claims
The Special Fund is responsible for providing workers’ compensation benefits to injured
workers whose employers have violated the law by not providing workers’ compensation
insurance. These workers’ compensation claims are called “no insurance claims.”

Number of Claims Notified to the No Insurance Section
1,227

680

612
436

CY 2008

d.

CY 2009

CY 2010

CY2011

Liability for Apportionment Under A.R.S. 23-1065(F)

Total Actuarial Liability for Apportionment In Millions

$55.9

$56.9

$74.2

$75.9

June 30, 2008*

June 30, 2009*

June 30, 2010**

June 30, 2011**

* Reported at a 50% confidence level
** Reported at a 75% confidence level
24

e.

Processing of Insolvency/Bankrupt Claims Under A.R.S. § 23-966

The Special Fund is responsible for continuing workers’ compensation benefits for those
claimants insured by insolvent carriers and bankrupt self-insured employers. The following are
the estimated reserves, excluding a 9.0% administrative fee, as of June 30, 2011, for those
claims:













Atlantic Mutual Insurance Company
Fremont Companies
Great States Insurance
Home Insurance Company
Legion Insurance Company
Mission Companies
Park Avenue Insurance Company
Paula Insurance Company
Reliance Insurance
Superior Companies
Western Employers Insurance Company
All Other Ins. Carriers &
Self-Insured Employers

Total of All Claims

3.3 million
100.0 million
16.5 million
6.5 million
16.4 million
11.0 million
3.3 million
14.3 million
18.6 million
10.0 million
4.0 million
9.1 million

212.9 million

Total Actuarial Liability for Claims Under A.R.S. 23-966
In Millions
$242.7

$215.5

$212.9

$191.0

June 30, 2008

June 30, 2009

June 30, 2010

25

June 30, 2011

f.

Vocational Rehabilitation

If certain criteria are met, a workers’ compensation claimant may be eligible for
vocational rehabilitation benefits. This rehabilitation program is focused on providing
vocational retraining that will result in meaningful employment. This training may
include a variety of college courses to supplement prior education and 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). Examples of past vocational programs provided include
bilingual tractor-trailer operator, equine instructor, forensics, mortuary science,
computer-aided drafting, and pharmacy technician. For those that are eligible for
vocational rehabilitation, but are lacking skills to enter a program, the Special Fund offers
foundational training in math, reading, and English (ESL).

Number of Vocational Rehabilitation Awards Issued
132
128

118
103

FY 07/08

5.

FY08/09

FY09/10

FY10/11

ADJUDICATION OF DISPUTES
The ALJ Division is the administrative tribunal of the Industrial Commission. Its mission
is to resolve all disputes coming before it efficiently and equitably. The ALJ Division has
jurisdiction over disputes that arise under the Arizona Workers’ Compensation Act, the
Occupational Health and Safety Act (“OSHA”), and the Arizona Minimum Wage Act. It is
also authorized to resolve disputes referred from the Department of Labor in the area of youth
employment.

26

Number of WC Cases Referred to ALJ Division
6,783

6,924

7,096

FY 07/08*

FY08/09**

FY09/10**

6,471

FY10/11**

* Includes unresolved requests for investigation under A.R.S. § 23-1061(J)
** Includes all requests for investigation under A.R.S. § 23-1061(J) for which a carrier response
has been requested.
Number of ADOSH Cases Referred to ALJ Division

77

53

FY 07/08

47

47

FY08/09

FY09/10

27

FY10/11

Number of Minimum Wage Cases Referred to ALJ
Division
9

3

0
FY 07/08

0
FY08/09

FY09/10

FY10/11

Number of Awards Issued by ALJ Division Involving
Compromise and Settlement Agreements

1,122

FY 07/08

1,478

1,319

FY08/09

1,221

FY09/10

FY10/11

Number of Hearings Held by ALJ Division
5,157

5,128

4,692
4,123

FY 07/08

FY08/09

FY09/10

28

FY10/11

6.

COMPLIANCE WITH WORKERS’ COMPENSATION INSURANCE LAWS
The Commission has authority to enforce the law requiring that employers provide workers’
compensation insurance to their employees. A variety of sources notify the Commission of
employers who may be violating Arizona law by not providing workers’ compensation
coverage for their employees. Through its Legal Division, the Commission investigates these
referrals, educates employers, initiates civil penalties against employers and, as a last resort,
pursues enforcement actions in Superior Court that may result in the Superior Court issuing an
injunction prohibiting the employer from conducting business unless the employer obtains the
appropriate insurance.

Number of Coverage Referrals
3,615

2,037

2,110

FY 07/08

FY08/09

2,046

FY09/10

FY10/11

Number of Civil Penalties Issued
188

140

FY 07/08

137

FY08/09

FY09/10

29

126

FY10/11

Number of Injunction Proceedings Initiated
60
52
43

FY 07/08

41

FY08/09

FY09/10

FY10/11

Number of Employers Insured Through Compliance
Efforts
313
288
258

243

FY 07/08

FY08/09

FY09/10

30

FY10/11

D. YOUTH EMPLOYMENT
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 State
Labor Department utilizes information gathered from the Commission’s Claims Division to review
and investigate workers’ compensation claims involving minors. It also receives and investigates
information from other governmental organizations and complaints filed by the public concerning
allegations of youth labor violations.
Number of Injury Reports Involving Minors
1,297

692

FY 07/08

FY08/09

402

356

FY09/10

FY10/11

Number of Confirmed Youth Employment Violations
45

12
5

1
FY 07/08

FY08/09

FY09/10

31

FY10/11

E. LICENSED AND REGULATED AGENCIES
Under Arizona Law, private employment agencies that charge a fee to an applicant are required
to be licensed and regulated by the Labor Department. The Labor Department investigates the
background of each firm applying for a license. Based on this investigation, the Industrial
Commission’s Employment Advisory Council recommends approval or denial of a license to the
Commission. The Commission administratively approves or denies the license. An appeal of that
administrative decision may be made before the five-member Commission through an administrative
hearing. The Commission’s decision is appealable to the Superior Court.
Number of Career Counseling Firms
26

26

26

24

FY 07/08

FY08/09

FY09/10

FY10/11

Number of Model & Talent Agencies
26

24

24

23

FY 07/08

FY08/09

FY09/10

32

FY10/11

Number of General Agencies

4

2

FY 07/08

FY08/09

1

1

FY09/10

FY10/11

Number of Sitter/Nanny Agencies

2

2

2

2

FY 07/08

FY08/09

FY09/10

FY10/11

33

Number of Licensed Agencies

59

55
53
50

FY 07/08

FY08/09

FY09/10

34

FY10/11

IV. State of the Commission
The Commission is a self-supporting, non-general fund agency whose operations and other
statutorily mandated functions are funded through an annual tax on workers’ compensation
premiums. The Administrative Fund (established under A.R.S. § 23-1081(A)) provides for the
Commission’s expenses in carrying out its powers and duties under Title 23, while the Special Fund
(established under A.R.S. § 23-1065(A)) provides for other statutorily mandated functions (which is
described in Section IV(C)(4) of this Report).
The current economic situation faced by the State of Arizona continues to impact the
Commission, which continues to experience declining revenues, legislatively mandated sweeps of
money from its Administrative Fund to the State General Fund, and other restrictions that limit the
Commission’s ability to fill vacant positions. Notwithstanding these impacts, the Commission has
continued to provide mission critical services to the public that it serves. The following provides a
brief overview of the operations of the Commission:
A.

Appropriated Budget FY 11/12: $19.5 million

B.

Administrative Fund Assessment Rate and Revenue:


Currently set at the maximum allowed under A.R.S. § 23-961, the assessment rate for the
Administrative Fund is 3.0% for calendar year 2012.



Historical Perspective of Rates and Revenues:
Calendar
Year
2011
2010
2009
2008

C.

3.0%
2.65%
3.0%
3.0%

Revenue in
Millions
$24.2
$20.5
$25.9
$30.5

% Change from
Prior Year
+4.09%
-10.58%
-14.87%
-4.13%

Legislatively Mandated Transfers from Administrative Fund to State General Fund:
 FY 11/12:
 FY 10/11:
 FY 09/10:
 FY 08/09:

D.

Rate

$426,700
$4.3 million
$3.7 million
$10.7 million

Full Time Employees at CY 2011 year end: 279 FTEs plus federal grant funded positions

35

Appendix A
Arizona Occupational Injuries, Illnesses & Fatalities

Agriculture, Forestry
Mining
Construction
Manufacturing
Transportation
Wholesale Trade
Retail Trade
Finance, Insurance
Services
Non-classifiable

2004

2005

2006

2007

2008

2009

2010

533
141
2569
1243
1502
687
2608
291
3218
86

443
154
2657
1123
1395
639
2370
279
2928
81

464
152
2866
1101
1472
714
2503
251
2896
111

473
147
2792
1027
1469
713
2584
302
4045
159

537
150
2439
931
1449
729
2402
316
4344
115

418
104
1444
698
1259
541
2001
249
3777
89

496
21
347
191
442
140
561
104
1142
718

36

Sprains, Strains
Fractures
Cuts, Lacerations
Bruises, Contusions
Heat Burns
Chemical Burns
Amputations
Multiple Injuries
Carpal Tunnel Syndrome
Tendonitis
Other

2004
4519
1324
1123
871
149
35
128
782
128
29
4094

2005
4366
1346
1107
775
123
28
138
680
83
25
2786

2006
4460
1443
1084
875
120
30
119
538
57
27
3200

37

2007
5325
1674
1320
1048
166
44
124
589
61
29
4078

2008
5582
1485
1256
1045
167
39
77
596
67
15
3852

2009
4926
1154
767
826
120
23
65
522
44
8
2923

2010
1859
345
283
293
61
11
21
104
14
3
1265

Head
Neck
Back
Wrist
Ankle
Knee
Multiple
Other

2004
533
172
2280
611
523
1453
1423
6187

2005
564
143
2004
530
547
1334
1211
5752

2006
430
172
2038
553
587
1379
1077
6255

38

2007
830
211
2355
647
780
1794
1349
6973

2008
722
234
2400
674
756
1922
1329
6621

2009
465
227
2077
562
593
1550
1049
5173

2010
179
114
768
218
264
592
322
2051

Contact with Object
Fall to Lower Level
Fall to Same Level
Slips, Trips
Overexertion
Repetitive Motion
Exposed to Harmful Substances
Transportation Accidents
Fires, Explosions
Assaults, Violent Acts
Other

2004
3343
1308
1927
143
3535
442
248
750
56
218
1212

2005
3197
1214
1976
52
3146
315
187
618
43
246
1081

2006
3140
1373
1975
37
3188
282
213
671
27
248
1391

39

2007
3595
1401
2501
156
3448
295
288
774
58
461
2061

2008
3352
1200
2795
121
3621
287
272
746
62
437
1858

2009
2425
880
2182
139
3233
230
228
551
33
390
1486

2010
878
259
797
58
1203
74
109
244
14
195
764

Chemicals, Chemical Products
Containers
Furniture, Fixtures
Machinery
Parts & Materials
Persons, Plants & Animals
Floor, Ground Surfaces
Handtools
Vehicles
All Other

2004
100
1599
400
840
1549
2430
3505
854
1247
658

2005
69
1419
380
845
1413
2068
3454
772
1053
602

2006
75
1554
319
843
1400
2249
3566
776
1149
614

40

2007
88
1613
430
893
1538
3351
4259
928
1256
682

2008
78
1575
439
812
1394
3293
4308
904
1250
698

2009
67
1443
335
574
939
2854
3321
733
984
527

2010
28
546
143
230
312
1233
1163
270
368
302

Managerial, Professional
Technical, Sales
Service
Farming, Forestry, Fishing
Precision Production, Craft
Operators, Fabricators
Others

2004
792
1688
1815
552
3514
4583
238

2005
739
1566
1713
482
3196
4122
257

2006
695
1674
1666
496
3300
4527
187

41

2007
1116
2044
2931
511
3610
4591
235

2008
1317
2096
3110
593
3400
4114
121

2009
1076
1758
2856
475
2309
3208
95

2010
235
525
870
133
616
919
923

42

Contact w/Objects
Falls
Exposure to Harmful
Substances/Environment
Transportation Incidents
Assaults and Violent
Acts

2004
9
11
8

2005
17
9
11

2006
11
15
13

2007
17
21
10

2008
7
16
11

2009
12
11
11

2010
8
9
8

42
13

42
16

54
19

36
11

49
16

32
10

28
24

* Source: Census of Fatal Occupational Injuries, Industrial Commission of Arizona

43