The news these days seems filled with doom and gloom about inflation leading to a looming recession. The question then is what will be the impact on WC claims. Looking back at the last major recession, which was officially from December 2007 to June 2009, does give us some idea what the future may hold.
In general, when workers are concerned about job security they tend to file more claims to protect their income. And after a company has layoffs, the bogus claims come out of the woodwork. All of a sudden that bumped knee from 3 months ago flares up.
Here are the Florida litigated claim numbers from the last recession. The number of new claims did not drop that significantly during the recession, but did start to drop during the recovery period. The timeframe is based on DOAH’s fiscal year reporting of July 1-June 30. The recession was from December 2007 through June 2009.
|Number of new FL files|
|July 2006-June 2007||36227||Before|
|July 2007-June 2008||34481||95%||6 months of recession|
|July 2008-June 2009||33995||99%||12 months of recession|
|July 2009-June 2010||30525||90%||Recovery|
However, the amount of litigation on open files actually increased during the recession. This is based on the number of overall Petitions for Benefits filed on all open claims regardless of what year the litigation began.
|Number of PFB’s filed/Litigation activity|
|July 2007-June 2008||72718||6 months of recession|
|July 2008-June 2009||73863||102%||12 months of recession|
|July 2009-June 2010||67971||92%||recovery|
These statistics are from the DOAH 2021 annual report, here is a link but don’t hit print its over 300 pages.
So a short-term recession may not have that much of an impact on the volume of WC litigation, but a prolonged slow recovery may actually have a greater impact.
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Morgan Indek | Managing Partner