THE INDUSTRIAL COMMISSION OF ARIZONA

ANNUAL REPORT FOR 2012

David M. Parker

Chairman

Susan Strickler

Vice Chair

John A. McCarthy, Jr.

Commissioner

Kathleen Oster

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………………………………………………………………..27

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
Appendix B: Arizona Occupational Injuries, Illnesses & Fatalities..……………………………………..39

HISTORY OF THE INDUSTRIAL COMMISSION
The Industrial Commission of Arizona (“ICA” or “Commission”) 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 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 2.3 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

1,494
1,397

1,276
1,117
895

FY07/08

FY08/09

FY09/10

FY10/11

FY11/12

Number of Serious, Willful and Repeat Violations Issued

777

800
754
674

FY07/08

FY08/09

FY09/10

4

711

FY10/11

FY11/12

Total Penalties Assessed
$1,040,000
$940,000
$827,814
$768,330
$707,256

FY07/08

FY08/09

FY09/10

FY10/11

FY11/12

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

2,450
2,249

FY07/08

2,271
2,122

FY08/09

2,060

FY09/10

5

FY10/11

FY11/12

In-Compliance Rate
100%
90%
80%
70%
60%
50%

45%

44%

43.2%

40%

31.6%
26.5%

30%
20%
10%
0%

FY07/08

2.

FY08/09

FY09/10

FY10/11

FY11/12

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:
Hazards Found During Consultation Surveys
3,204

1,784
1,374
1,068

FY07/08

FY08/09

FY09/10

6

FY10/11

1,250

FY11/12

Number of Training Programs Conducted
404

309

299
230
194

FY07/08

FY08/09

FY09/10

FY10/11

FY11/12

3,175

2,970

FY10/11

FY11/12

Number of Employees Trained
6,966
6,341

4,631

FY07/08

FY08/09

FY09/10

7

Number of Employers Trained
3,068

2,255

2,178
2,009
1,444

FY07/08

3.

FY08/09

FY09/10

FY10/11

FY11/12

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
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

4,291

3,304

3,118

3,092

1,615

FY07/08

FY08/09

FY09/10

8

FY10/11

FY11/12

Number of Boiler Deficiencies Identified

2,933
2,322
1,890

1,932

FY10/11

FY11/12

5,612

5,790

5,959

FY09/10

FY10/11

FY11/12

1,291

FY07/08

FY08/09

FY09/10

Number of Elevators Inspected

5,847

6,041

FY07/08

FY08/09

9

Number of Elevators With Deficiencies
5,431

3,031

FY07/08

4.

FY08/09

2,882

FY09/10

2,321

2,462

FY10/11

FY11/12

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.
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.

10

In September 2010, the Bureau of Labor Statistics completed a major revision to the
Occupational Injury and Illness Classification System (“OIICS”). The revised OIICS structure
(“OIICS 2.01”) will be used beginning with reference year 2011 for both the Census of Fatal
Occupational Injuries (“CFOI”) and the Survey of Occupational Injuries and Illnesses (“SOII”)
programs. Because of the extensive revisions, data for the OIICS case characteristics for reference
year 2011 represent a break in series with data for prior years. More information on OIICS can be
found at www.bls.gov/iif/oshoiics.htm. As a result of the break in series, new survey ID’s have been
created for the public IIF databases (www.bls.gov/iif/data.htm) for CFOI and SOII.
The Standard Occupational Classification (“SOC”) system is used to classify occupations for
both CFOI and SOII. Beginning with reference year 2011, a revised version of the SOC system will
be used to classify occupations. While the changes to the new structure (“SOC 2010”) were not
extensive, comparisons of SOC 2000 and SOC 2010 occupations should be made with caution. More
information on the 2010 SOC, including an overview of new items in SOC 2010, can be found here:
www.bls.gov/soc/home.htm.
The North American Industry Classification System (“NAICS”) is used to classify industry for
both CFOI and SOII. For reference year 2014, the CFOI and SOII programs will adopt a revised
industry classification system, NAICS 2012, which will represent a break in series. More
information on NAICS can be found here: www.bls.gov/bls/naics.htm.
For more information on the different coding structures used and the years to which they
apply, please see the BLS Handbook of Methods at www.bls.gov/opub/hom/homch9.htm.
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 20-23. Fatality statistics are found
in Appendix A and B.
Appendix A reflects the revised OIICS, SOC and NAICS codes that have been implemented
for the fatality statistics beginning 2011. Appendix B reflects the former OIICS, SOC and NAICS
codes for fatality statistics ending in 2010.

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 $5,000 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

3,295
2,858

FY07/08

FY08/09

2,514

2,577

2,570

FY09/10

FY10/11

FY11/12

12

2.

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
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
83

58

FY07/08

FY08/09

31

27

25

FY09/10

FY10/11

13

FY11/12

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
122,814

CY2008

98,718

96,704

96,480

99,547

CY2009

CY2010

CY2011

CY2012

14

Claims Frequency Per 100,000 Workers
5,691
4,685
3,980

Arizona

Colorado

Nevada

4,140

4,314

New Mexico

Utah

Source: National Council on Compensation Insurance, Statistical Plan data for policies ending in 2009

Claims Frequency of Lost Time Claims Per 100,000 Workers

1,173
991
912

739
660

Arizona

Colorado

Nevada

New Mexico

Utah

Source: National Council on Compensation Insurance, Statistical Plan data for policies ending in 2009

15

Number of Average Monthly Awards Issued

19,132
15,120

FY07/08

FY08/09

12,994

13,577

13,843

FY09/10

FY10/11

FY11/12

Number of Loss In Earning Capacity Awards Issued
2,661
2,420
2,262

FY07/08

FY08/09

FY09/10

16

2,382
2,160

FY10/11

FY11/12

2.

RATES, PREMIUMS AND LOSSES
Arizona Premium Rate Index per $100 of Payroll: $1.61 (eff. 1/01/2012)
2012 Ranking: 36 (15th lowest out of 51 jurisdictions)
Percent of National Median ($1.88): 86%
$3.20
$3.00

Range of Premium Rates

$2.80
$2.60
$2.40

AZ Workers Compensation Premium Rate Per $100 of Payroll

$2.20
$2.00

$1.77

$1.80

$1.73

$1.63

$1.67

$1.71

2008

2010

$1.61

$1.49

$1.60
$1.40
$1.20
$1.00
2000

2002

2004

2006

2012

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

4

2.4

2

0.6

0
02

03

04

05

06

07

08

Jan 08 Oct 08 Jan 10 Jan 11 Jan 12 Jan 13

-2
-4

-6

-2.8

-3.1
-4.2

-4.3

Arizona’s voluntary cumulative rate level change since October 2000: -9.0 %

17

CY Total Taxable Premium Written In Millions
$1,059.3

$1,015.5
$923.5
$864.4
$773.0

2007

2008

2009

2010

$806.0

2011

2012

CY Total Direct Losses In Millions
$568.2
$558.7

$562.6

$558.7
$544.7

$519.4

2007

2008

2009

2010

18

2011

2012

3.

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

Industry TRCR's by State
8
7
6
5
4

Private Industry

3

State Gov't

2

Local Gov't

1
0

State TRCR's by Industry
8
7

National

6

AZ

5

CA

4

WA

3

OR

2

NV
NM

1

UT

0
Private Industry

National
AZ
CA
WA
OR
NV
NM
UT

State Gov't

Private Industry
3.5
3.2
3.5
4.9
3.8
3.9
4.2
3.6

State Gov't
4.6
3.0
5.4
4.6
3.0
4.7
4.5
2.6
19

Local Gov't

Local Gov't
6.1
5.5
7.5
7.0
5.4
5.7
7.5
5.1

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

Industry DART's by State
4
3.5
3
2.5
Private Industry

2
1.5

State Gov't

1

Local Gov't

0.5
0

State DART's by Industry
4
3.5

National

3

AZ

2.5

CA

2

WA

1.5

OR

1

NV
NM

0.5

UT

0
Private Industry

National
AZ
CA
WA
OR
NV
NM
UT

State Gov't

Private Industry
1.8
1.5
2.0
2.5
2.1
2.0
2.1
1.5

State Gov't
2.3
1.6
2.8
2.1
1.6
1.9
2.1
.8

20

Local Gov't

Local Gov't
2.6
2.3
3.6
3.2
2.5
2.3
2.9
1.2

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

Industry Lost Time Cases by State
3
2.5
2
Private Industry

1.5

State Gov't

1

Local Gov't

0.5
0

State Lost Time Cases by Industry
3
National

2.5

AZ
2

CA
WA

1.5

OR

1

NV

0.5

NM
UT

0
Private Industry

National
AZ
CA
WA
OR
NV
NM
UT

Private Industry
1.1
.9
1.0
1.6
1.3
1.0
1.3
.7

State Gov't

State Gov't
1.8
1.2
2.0
1.9
1.2
1.2
1.1
.5

21

Local Gov't

Local Gov't
1.9
1.1
2.4
2.7
1.8
1.8
1.7
.7

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

Industry Transfer/Restriction Rate by State
1.4
1.2
1
0.8

Private Industry

0.6

State Gov't

0.4

Local Gov't

0.2
0

State Transfer/Restriction Rate by Industry
1.4
National

1.2

AZ

1

CA

0.8

WA

0.6

OR

0.4

NV

0.2

NM
UT

0
Private Industry

National
AZ
CA
WA
OR
NV
NM
UT

State Gov't

Private Industry
.7
.7
1.0
.9
.8
1.0
.8
.7

State Gov't
.5
.4
.8
.3
.4
.8
1.0
.3

Local Gov't

Local Gov't
.7
1.2
1.2
.5
.8
.6
1.2
.5

**Source: Incident Rates from Tables 1 & 6, Nonfatal Occupational Injuries and Illness by Industry, 2011, 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
self-insured 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.

Special Fund Assessment Rate and Revenue


The maximum assessment rate allowed under the applicable statutes is 2.5%. Currently set at
less than the maximum, the assessment rate for the Special Fund is 2.25% for calendar year
2013. This rate includes the 1.25% assessment authorized under A.R.S. § 23-1065(A), the .50%
assessment authorized under A.R.S. 23-1065(F), and the .50% assessment authorized under
A.R.S. § 23-966. Revenue generated for CY 2012: $23,103,067.



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%
2012:
2.5%

23

b.

Special Fund Actuarial Picture


Total liabilities estimated as of 6-30-12: $519.9 million (an increase of $54.4 million from prior
year)



Special Fund total assets as of 6-30-12: $473.0 million (an increase of $21.6 million from prior
year)



Actuarial deficit estimated as $46.9 million with an 80% confidence level (an increase of $32.8
million from the prior year).

In the last quarter of calendar year 2013, the Commission will publish a report showing the amount
of cash and assets held by the Special Fund that are attributable to the payment of claims of insolvent
carriers as of June 30, 2013. Thereafter, to meet the reporting needs of our stakeholders, the Commission
expects to publish an audited Comprehensive Annual Financial Report (CAFR) for the Special Fund. The
first report is expected to be published in late 2014 and will include the fiscal period ending June 30, 2014.
Previously, such financial statements were only issued as a component of the State’s CAFR.
c.

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

CY 2008

CY 2009

612

CY 2010

24

436

417

CY2011

CY2012

d.

Liability for Apportionment Under A.R.S. 23-1065(F)
Total Actuarial Liability for Apportionment In Millions
$94.1
$83.2
$74.1

$55.9

$56.9

June 30, 2008*

June 30, 2009*

June 30, 2010**

* Reported at a 50% confidence level
** Reported at a 75% confidence level
e.

June 30, 2011***

June 30, 2012***

*** Reported at an 80% confidence level

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, 2012, 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

5.6 million
105.5 million
19.3 million
6.7 million
17.6 million
12.0 million
5.8 million
16.0 million
20.8 million
10.5 million
4.5 million
11.6 million

235.9 million

25

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

$242.7

$235.9
$215.5

$212.9
$191.0

June 30, 2008

f.

June 30, 2009

June 30, 2010

June 30, 2011

June 30, 2012

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

128

132

FY09/10

FY10/11

118

125

103

FY 07/08

FY08/09

26

FY11/12

5.

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.
Number of WC Cases Referred to ALJ Division

6,783

6,924

FY 07/08*

FY08/09**

7,096

6,471

FY09/10**

FY10/11**

6,857

FY11/12**

* 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

FY 07/08

47

47

FY08/09

FY09/10

27

53

51

FY10/11

FY11/12

Number of Minimum Wage Cases Referred to ALJ Division

9

3
0
FY 07/08

FY08/09

FY09/10

0

0

FY10/11

FY11/12

Number of Awards Issued by ALJ Division Involving Compromise and
Settlement Agreements
1,478
1,319
1,122

FY 07/08

FY08/09

1,364
1,221

FY09/10

FY10/11

FY11/12

Number of Hearings Held by ALJ Division

5,157

5,175

5,128
4,692
4,123

FY 07/08

FY08/09

FY09/10

28

FY10/11

FY11/12

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

2,897

2,037

2,110

FY07/08

FY08/09

2,046

FY09/10

FY10/11

FY11/12

Number of Civil Penalties Issued
188
167
140

137
126

FY 07/08

FY08/09

FY09/10

29

FY10/11

FY11/12

Number of Injunction Proceedings Initiated
63

60
52
43

FY07/08

41

FY08/09

FY09/10

FY10/11

FY11/12

Number of Employers Insured Through Compliance Efforts

313
288
258

243

215

FY07/08

FY08/09

FY09/10

30

FY10/11

FY11/12

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

402

FY07/08

FY08/09

FY09/10

356

349

FY10/11

FY11/12

Number of Confirmed Youth Employment Violations
45

12
5

5
1

FY07/08

FY08/09

FY09/10

31

FY10/11

FY11/12

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

FY07/08

FY08/09

FY09/10

24

FY10/11

FY11/12

Number of Model & Talent Agencies
26

25

24

24

23

FY07/08

FY08/09

FY09/10

32

FY10/11

FY11/12

Number of General Agencies
4

2

FY07/08

FY08/09

1

1

1

FY09/10

FY10/11

FY11/12

Number of Sitter/Nanny Agencies

2

2

2

2

1

FY07/08

FY08/09

FY09/10

33

FY10/11

FY11/12

Number of Licensed Agencies
59

55
53
51
50

FY07/08

FY08/09

FY09/10

34

FY10/11

FY11/12

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 following provides a brief overview of the operations of the Commission:
A.

Appropriated Budget FY 12/13: $19.9 million

B.

Administrative Fund Assessment Rate and Revenue:


The maximum assessment rate allowed under A.R.S. § 23-961 is 3.0%. Currently set at less than
the maximum allowed, the assessment rate for the Administrative Fund is 2.75% for calendar
year 2013. Revenue generated for CY 12: 27,721,786.



Historical Perspective of Rates and Revenues:
Calendar
Year
2012
2011
2010
2009
2008

C.

3.0%
3.0%
2.65%
3.0%
3.0%

Revenue in
Millions
$27.7
$24.2
$20.5
$25.9
$30.5

% Change from
Prior Year
+14.71%
+17.97%
-21.06%
-14.82%
-4.13%

Legislatively Mandated Transfers from Administrative Fund to State General Fund:






D.

Rate

FY 12/13:
FY 11/12:
FY 10/11:
FY 09/10:
FY 08/09:

$0
$426,700
$4.3 million
$3.7 million
$10.7 million

Full Time Employees at CY 2012 year end: 270 FTEs plus federal grant funded positions

35

Appendix A
Arizona Occupational Injuries, Illnesses & Fatalities
With the implementation of new changes in our current Supplemental Data System (SDS), some technical
issues were discovered and are currently being addressed. The Industrial Commission of Arizona would
like to provide accurate and current Lost Workday Claims statistics to the public.
In an effort to provide this, our MIS Department has taken on the challenge to reprogram, update and
complete an entire overhaul of the SDS database along with future implementations of other databases and
applications. While the Industrial Commission of Arizona understands the need to report current Lost
Workday Claims statistics, trends and reporting for use to the general public, the ICA also expects to
provide those statistics accurately and efficiently.
Due to this enactment, the Industrial Commission of Arizona will provide the most current Lost Workday
Claim statistics in the 2013 Annual Report.
Also, the following charts will be finalized with the revised coding structures used by the North American
Industry Classification System (“NAICS”), the Occupational Injury and Illness Classification System
(“OIICS”), and the Standard Occupational Classification (“SOC”) system in approximately June of 2014.







Lost Workday Claims by Major Industry
Lost Workday Claims by Nature of Injury
Lost Workday Claims by Part of Body
Lost Workday Claims by Event or Exposure
Lost Workday Claims by Source
Lost Workday Claims by Occupation

36

Total Occupational Fatalities - Arizona
120

100

80

60

40

20

0

2004 (F)
TOTAL
84

2005 (F)
99

2006 (F)
112

2007 (F)
97

(F) - Final

37

2008 (F)
100

2009 (F)
76

2010 (F)
77

2011(F)
69

Fatal Occupational Injuries by Event or Exposure **
35
Contact with Objects & Equipment
30
Fires & Explosions

25

20

Falls, Slips, Trips

15

Exposure to Harmful Substances &
Environment

10

Transportation Incidents

5
Violence & Other Injuries by
Persons or Animals

0
2011

Contact with Objects &
Equipment
Fires & Explosions
Falls, Slips, Trips
Exposure to Harmful
Substances/Environment
Transportation Incidents
Violence & Other
Injuries by Persons

2011
*
*
13
6
31
14

* Un-publishable – Number lower than publishable ratio
** Source: Census of Fatal Occupational Injuries, Industrial Commission of Arizona

38

Appendix B
Arizona Occupational Injuries, Illnesses & Fatalities

Fatal Occupational Injuries by Event or Exposure *
60
50

Contact w/Objects

40

Falls

30

Exposure to Harmful
Substances/Environment

20

Transportation Incidents

10

Assaults and Violent Acts

0
2004

2005

2006

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

2007

2008

2009

2010

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

39