THE INDUSTRIAL COMMISSION OF ARIZONA

ANNUAL REPORT FOR 2013

David M. Parker

Chairman

Susan Strickler

Vice Chair

Kathleen Oster

Commissioner

Michael G. Sanders

Commissioner

Joseph M. Hennelly, Jr.

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.

Occupational Safety and Health… ...........................................................................3
1. Compliance… ....................................................................................................3
2. Consultation & Training… ................................................................................6
3. Boilers & Elevators… ........................................................................................8
4. Occupational Injury, Illness & Fatal Statistics… ............................................10

B.

Payment of Wages… ............................................................................................12
1. Resolution of Wage Disputes….......................................................................12
2. Minimum Wage Law Enforcement… .............................................................12

C.

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

IV.

D.

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

E.

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

State of the Commission… .............................................................................................34

Appendix A: Arizona Occupational Injuries, Illnesses & Fatalities… ...........................................35
Appendix B: Arizona Occupational Injuries, Illnesses & Fatalities… ...........................................43

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
worker’s 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 worker’s 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 self-insured 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 years terms. As a non-general 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 27 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
the facts presented. 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.
3

The following represent statistics related to citations issued by ADOSH during the applicable
state fiscal year.

Number of Compliance Inspections Conducted
1,494
1,276

1,218
1,117
895

FY 08/09

FY 09/10

FY 10/11

FY 11/12

FY 12/13

Number of Serious, Willful and Repeat Violations Issued
800

796

FY 11/12

FY 12/13

754

711

674

FY 08/09

FY 09/10

FY 10/11

4

Total Penalties Assessed
$940,000
$827,814
$768,330

$763,864
$707,256

FY 08/09

FY 09/10

FY 10/11

FY 11/12

FY 12/13

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
2,271
2,122

2,060
1,680

FY 08/09

FY 09/10

FY 10/11

5

FY 11/12

FY 12/13

In-Compliance Rate
50.0%
45.0%

44.0%

43.2%

40.0%

36.0%

35.0%

31.6%

30.0%

26.5%

25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
FY 08/09

FY 09/10

FY 10/11

FY 11/12

FY 12/13

2. 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.
The consultation department also oversees key outreach and partnership programs that help
strengthen both public and private entity’s understanding of ADOSH’s mission and vision. The
programs include the Voluntary Protection Program, the Safety and Health Achievement Recognition
Program, Partnerships and Alliances. Employers who have chosen to partner with ADOSH have seen
injury and illnesses reduced dramatically below their industry average. Therefore the employer helps
to improve workplace safety for all employees. Employers who want to work to improve their
workplace or industry may contact the program manager to gain more information on the programs.
Free training programs are also provided by ADOSH to business organizations, labor
organizations and individual employers upon request. The following represent statistics related to
consultation services provided by ADOSH during the applicable state fiscal year.

6

Hazards Found During Consultation Surveys
1,784
1,374
1,250
1,068
733

FY 08/09

FY 09/10

FY 10/11

FY 11/12

FY 12/13

Number of Training Programs Conducted
309

299

293
230
194

FY 08/09

FY 09/10

FY 10/11

FY 11/12

FY 12/13

Number of Employees Trained
6,966

4,631

FY 08/09

FY 09/10

3,175

2,970

FY 10/11

FY 11/12

7

3,443

FY 12/13

Number of Employers Trained
2,255

2,178

2,359

2,009

1,444

FY 08/09

FY 09/10

FY 10/11

FY 11/12

FY 12/13

3. 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
4,932

4,688
4,079
3,247

FY 08/09

FY 09/10

FY 10/11

8

FY 11/12

3,439

FY 12/13

Number of Boiler Deficiencies Identified
3,127
2,408
1,913
1,636

FY 08/09

FY 09/10

FY 10/11

FY 11/12

1,750

FY 12/13

Number of Elevators Inspected
6,797
6,041

FY 08/09

5,612

5,790

5,959

FY 09/10

FY 10/11

FY 11/12

9

FY 12/13

Number of Elevators With Deficiencies
3,235
3,031

2,882
2,321

FY 08/09

FY 09/10

FY 10/11

2,462

FY 11/12

FY 12/13

4. 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

10

identify lost workday claims by major industry, nature of injury, body part injured, event or exposure,
source of injury, and occupation.
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 21-24. 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
2,858

2,729

2,577

2,570

FY 10/11

FY 11/12

2,514

FY 08/09

FY 09/10

FY 12/13

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
12

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

FY 08/09

31

27

25

FY 09/10

FY 10/11

13

FY 11/12

28

FY 12/13

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 they understand the
Arizona workers’ compensation system and process.
1. Claims Statistics
Number of Workers' Compensation Claims Filed

109,085

99,215

97,730

95,446
93,797

FY 08/09

FY 09/10

FY 10/11

14

FY 11/12

FY 12/13

Claims Frequency Per 100,000 Workers
5,691
4,685
4,140

3,980

Arizona

Colorado

Nevada

New Mexico

4,314

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
15,120

13,843

13,881

FY 11/12

FY 12/13

13,577
12,994

FY 08/09

FY 09/10

FY 10/11

Number of Loss In Earning Capacity Awards Issued
2,420
2,382
2,349

2,262

2,160

FY 08/09

FY 09/10

FY 10/11

16

FY 11/12

FY 12/13

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%
$3.00

Range of Premium Rates

$2.80
$2.60

AZ Workers Compensation Premium Rate Per $100 of Payroll

$2.40
$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

5.2
4.5

4.5

4.1

4

4

3.2
2.4

2
0.6
0

2002

2003

2004

2005

2006

2007

2008 Jan-08 Oct-08 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

-2
-2.8

-3.1

-4

-4.2

-4.3
-6
Arizona’s voluntary cumulative rate level change since October 2000: -9.0%

17

CY Total Taxable Premium Written In Millions
$1,059.30

$1,058.93

$1,015.50
$923.50
$864.40
$773.00

2007

2008

2009

2010

$806.00

2011

2012

2013

CY Total Direct Losses In Millions
$568.20
$558.70

$562.60

$558.70

$559.96

2012

2013

$544.70

$519.40

2007

2008

2009

2010

18

2011

3. Injury and Illness Incident Rates*
TRC: Total Recordable Cases**
Industry TRCR's by State

8
7
6
5

Private Industry

4
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

1

NM

0

UT

Private Industry

State Gov't

Local Gov't

Private Industry

State Gov't

Local Gov't

National

3.4

4.4

6.1

AZ

3.2

2.9

5.5

CA

3.5

5.9

7.4

WA

4.8

4.2

7.3

OR

3.9

2.7

5.0

NV

4.1

3.9

5.6

NM

3.9

4.6

7.1

UT

3.4

3.7

4.2

19

DART: Cases with days away from work, job transfer, or restriction**
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

National

3.5
3

AZ

2.5

CA

2

WA

1.5

OR

1

NV

0.5

NM

0

UT
Private Industry

State Gov't

Local Gov't

Private Industry

State Gov't

Local Gov't

National

1.8

2.1

2.5

AZ

1.6

1.5

2.2

CA

2.1

3.1

3.6

WA

2.5

2.1

3.3

OR

2.2

1.6

2.1

NV

2.4

1.9

2.4

NM

1.9

1.8

2.6

UT

1.4

.6

1.0

20

Lost Time Rate: Cases with days away from work**
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

1.5

WA
OR

1

NV
0.5

NM

0

UT
Private Industry

State Gov't

Local Gov't

Private Industry

State Gov't

Local Gov't

National

1.0

1.7

1.8

AZ

.9

1.2

1.1

CA

1.1

2.2

2.4

WA

1.5

1.8

2.8

OR

1.5

1.3

1.6

NV

1.1

.7

1.7

NM

1.1

1.1

1.4

UT

.7

.4

.7

21

Restricted Rate: Cases with transfer or restriction**
Industry Transfer/Restricion 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

0

UT
Private Industry

National
AZ
CA
WA
OR
NV
NM
UT

State Gov't

Local Gov't

Private Industry

State Gov't

Local Gov't

.7
.7
1.0
.9
.8
1.2
.8
.7

.4
.3
.9
.4
.4
1.1
.8
.2

.7
1.1
1.2
.5
.5
.7
1.3
.3

*Source: Incident Rates from Table 6, Nonfatal Occupational Injuries and Illnesses by Industry, 2012, Bureau of Labor
Statistics
**TRCR, DART, Lost Time, and Restricted Rates - Rates per 100 Employees

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 claims

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 1.75% for calendar year
2014. This rate includes the 1.14% assessment authorized under A.R.S. §23-1065(A), the
.25% assessment authorized under A.R.S. §23-1065(F), and the .36% assessment authorized
under A.R.S. §23-966 (D). Revenue generated for CY 2013: $23,783,099.
Historical Perspective of Special Fund Rates:
1993 to 2003:
zero
2004:
1.5%
2005 to 2007:
2.5%
2008 and 2009: 1.5%
2010 to 2012:
2.5%
2013:
2.25%

b. Special Fund Actuarial Picture



Total liabilities estimated as of 6-30-13: $535.4 million (an increase of $15.5 million from
prior year)
Special Fund total assets as of 6-30-13: $518.4 million (an increase of $45.4 million from
prior year)
23



Actuarial deficit estimated as $17.0 million with an 80% confidence level (an increase of
$29.9 million from the prior year)

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 2015. 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
844

642

FY 08/09

FY 09/10

511

514

501

FY 10/11

FY 11/12

FY 12/13

24

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

$94.3

June 30,2012***

June 30,2013***

$83.2
$74.1
$56.9

June 30,2009*

June 30,2010**

June 30,2011***

* Reported at a 50% confidence level *** Reported at an 80% confidence level
** Reported at a 75% confidence level

e. Processing of Insolvency/Bankrupt Claims Under A.R.S. §23-966
The Special Fund is responsible for continuing workers’ compensation benefits for 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, 2013, for those claims:














Atlantic Mutual Insurance Company
Fremont Insurance Companies
Great States & HIH Insurance Companies
Home Insurance Company
Legion & Villanova Insurance Companies
Lumbermens Mutual Casualty Company
Mission Insurance Companies
Park Avenue Insurance Company
Paula Insurance Company
Reliance Insurance Company
Superior Insurance Companies
Western Employers Insurance Company
All Other Ins. Carriers & Self-Insured Employers
Total of All Claims

$5.8 million
101.9 million
19.5 million
7.1 million
18.2 million
10.8 million
11.9 million
4.3 million
14.8 million
20.0 million
10.6 million
4.3 million
7.4 million
$236.4 million

25

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

$215.5

$235.9

$239.0

June 30, 2012

June 30, 2013

$212.9

$191.0

June 30, 2009

June 30, 2010

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 Awards Issued

128

132

FY 09/10

FY 10/11

136
125

103

FY 08/09

26

FY 11/12

FY 12/13

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
7,096

7,052

6,924
6,857

6,471

FY 08/09

FY 09/10

FY 10/11

FY 11/12

FY 12/13

* 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
53
52
51

47

47

FY 08/09

FY 09/10

FY 10/11

27

FY 11/12

FY 12/13

Number of Minimum Wage Cases Referred to ALJ Division
9

3

FY 08/09

FY 09/10

0

0

0

FY 10/11

FY 11/12

FY 12/13

Number of Awards Issued by ALJ Division Involving Compromise and
Settlement Agreements
1,478
1,364

1,319

FY 08/09

1,453

1,221

FY 09/10

FY 10/11

FY 11/12

FY 12/13

Number of Hearings Held by ALJ Division
5,157

5,190

5,128
4,692
4,123

FY 08/09

FY 09/10

FY 10/11

28

FY 11/12

FY 12/13

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

2,421
2,110

FY 08/09

2,046

FY 09/10

FY 10/11

FY 11/12

2,243

FY 12/13

Number of Civil Penalties Issued
188

183
167
137
126

FY 08/09

FY 09/10

FY 10/11

29

FY 11/12

FY 12/13

Number of Injunction Proceedings Initiated
63
60

59

52

38

FY 08/09

FY 09/10

FY 10/11

FY 11/12

FY 12/13

Number of Employers Insured Through Compliance Efforts
313
288

258

FY 08/09

FY 09/10

FY 10/11

30

244

FY 11/12

258

FY 12/13

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
692

451
402

FY 08/09

FY 09/10

356

349

FY 10/11

FY 11/12

FY 12/13

Number of Confirmed Youth Employment Violations
12

5

5

1

FY 08/09

FY 09/10

FY 10/11

31

1

FY 11/12

FY 12/13

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

24

FY 08/09

FY 09/10

FY 10/11

24

24

FY 11/12

FY 12/13

Number of Model & Talent Agencies

24

25

25

FY 11/12

FY 12/13

24

23

FY 08/09

FY 09/10

FY 10/11

32

Number of General Agencies
2

FY 08/09

1

1

1

1

FY 09/10

FY 10/11

FY 11/12

FY 12/13

Number of Sitter/Nanny Agencies
2

FY 08/09

2

2

FY 09/10

FY 10/11

1

1

FY 11/12

FY 12/13

Number of Licensed Agencies
55
53
51

51

FY 11/12

FY 12/13

50

FY 08/09

FY 09/10

FY 10/11

33

IV. State of the Commission
The Commission is a self-supporting, non-general fund agency whose operations and other
statutorily mandated function is 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 gradual improvement in Arizona’s economy is reflected in the Commission’s tax rate
decreases and revenue increases. The following provides a brief overview of the operations of the
Commission:
A. Appropriated Budget FY 13/14: $19.9 million
B. Administrative Fund Assessment Rate and Revenue:



Currently set below the 3.0% maximum allowed under A.R.S. § 23-961, the assessment
rate for the Administrative Fund is 1.75% for calendar year 2014.
Historical Perspective of Rates and Revenues:
Calendar Year

Rate

2013
2012
2011
2010
2009

2.75%
3.0%
3.0%
2.65%
3.0%

Revenue in
Millions
$29.1
$27.7
$24.2
$20.5
$25.9

% Change from
Prior Year
+4.97%
+14.64%
+17.97%
-21.06%
-14.82%

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

FY 13/14:
FY 12/13:
FY 11/12:
FY 10/11:
FY 09/10:

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

D. Full Time Employees at CY 2013: 270 FTEs, including 34.4 Federally funded FTEs

34

Appendix A
Arizona Occupational Injuries, Illnesses & Fatalities
Lost Workday Claims by Major Industry
6000
Agriculture, Forestry, Fishing and
Hunting
5000

Construction
Finance and Insurance

4000

Manufacturing
Mining, Quarrying, and Oil and
Gas Extraction

3000

Other Services (except Public
Administration)
Retail Trade

2000

Transportation and Warehousing

1000

Wholesale Trade
All Other Industries

0

2011

Industry

2011

Agriculture, Forestry, Fishing and Hunting
Construction
Finance and Insurance
Manufacturing
Mining, Quarrying, and Oil and Gas Extraction
Other Services (except Public Administration)
Retail Trade
Transportation and Warehousing
Wholesale Trade
All Other Industries

211
1,016
94
577
95
321
1,457
1,020
518
5,524

35

Lost Workday Claims by Nature
6,000

5,000
Sprains, Strains
Fractures

4,000

Cuts, Lacerations
Bruises
3,000

Heat Burns
Chemical Burns

Amputations

2,000

Carpal Tunnel
Multiple Traumatic Injuries
All Other Nature

1,000

0
2011

Nature

2011

Sprains, Strains
Fractures
Cuts, Lacerations
Bruises
Heat Burns
Chemical Burns
Amputations
Carpal Tunnel
Multiple Traumatic Injuries
All Other Nature

2,776
955
654
770
83
17
38
30
31
5,479

36

Lost Workday Claims by Part
2500

Head

2000

Neck
Back
Shoulder

1500

Arm
Hand
Wrist

Knee

1000

Ankle
Foot
Body Systems
500

Multiple Parts
All Other Parts

0

2011

Part

2011

Head
Neck
Back
Shoulder
Arm
Hand
Wrist
Knee
Ankle
Foot
Body Systems
Multiple Parts
All Other Parts

420
214
1,944
1,065
508
1,367
485
1,434
501
516
70
768
1,541

37

Lost Workday Claims by Event
4,500

4,000
Contact w/Objects & Equipment
3,500
Falls, Slips, Trips
3,000
Overexertion & Bodily Reaction
2,500

Exposure to Harmful Substance or
Environment

2,000

Transportation Incidents
Fires & Explosions

1,500

Violence & Other Injuries by
Persons or Animal

1,000

All Other Events
500

0

2011

Event

2011

Contact w/Objects & Equipment
Falls, Slips, Trips
Overexertion & Bodily Reaction
Exposure to Harmful Substance or Environment
Transportation Incidents
Fires & Explosions
Violence & Other Injuries by Persons or Animal
All Other Events

2,307
1,800
4,257
202
684
41
441
1,101

38

Lost Workday Claims by Source
3000
Chemicals & Chemical Products
2500

Containers, Furniture & Fixtures
Machinery

2000
Parts & Materials
1500

Persons, Plants, Animals, &
Minerals
Structures & Surfaces

1000
Tools, Instruments, & Equipment
Vehicles

500

All Other Sources
0

2011

Source

2011

Chemicals & Chemical Products
Containers, Furniture & Fixtures
Machinery
Parts & Materials
Persons, Plants, Animals, & Minerals
Structures & Surfaces
Tools, Instruments, & Equipment
Vehicles
All Other Sources

61
1,652
549
755
2,779
2,235
829
1,020
953

39

Lost Workday Claims by Occupation
3500

3000

Construction & Extraction
Occupations

2500

Installation, Maintenance & Repair
Service Occupations
Protective Service Occupations

2000

Healthcare Occupations

1500

Food Preparation & Serving
Occupations

1000

Building & Ground Cleaning &
Maintenance Occupations
Transportation & Material Moving
Occupations

500

All Other Occupations
0

2011

Occupations
Construction & Extraction Occupations
Installation, Maintenance & Repair Service Occupations
Protective Service Occupations
Healthcare Occupations
Food Preparation & Serving Occupations
Building & Ground Cleaning & Maintenance Occupations
Transportation & Material Moving Occupations
All Other Occupations

40

2011
979
918
865
1,124
605
710
2,349
3,283

Total Occupational Fatalities - Arizona
120

100

80

60

40

20

0

2004 (F)
TOTAL
84

2005 (F)
99

2006 (F)
112

2007 (F)
97

2008 (F)
100

2009 (F)
76

2010 (F)
77

(F) - Final
Source: Census of Fatal Occupational Injuries, Industrial Commission of Arizona

41

2011(F)
69

2012 (F)
60

Fatal Occupational Injuries by Event or Exposure **
35

30

Violence & Other Injuries by
Persons or Animals

25

Contact w/Objects & Equipment
20
Falls, Slips, Trips
15
Exposure to Harmful
Substances/Environment
10

Transportation Incidents

5

0
2011

2012

Contact w/Objects & Equipment
Falls, Slips, Trips
Exposure to Harmful Substances/Environment
Transportation Incidents
Violence & Other Injuries by Persons or Animals

2011
*
13
6
31
14

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

42

2012
7
7
4
25
15

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
Transportation Incidents

20

Assaults and Violent Acts
10

0
2008

2009

2010

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

2008
7
16
11
49
16

2009
12
11
11
32
10

2010
8
9
8
28
24

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

43