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Physician Shopping in Workers' Compensation: Evidence from California

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  • Seth A. Seabury
  • Robert T. Reville
  • Frank Neuhauser

Abstract

Physician evaluations of impairment severity have a significant impact on the size of permanent disability benefits awarded to injured workers in workers' compensation. This gives both parties in a disputed claim the incentive to “shop” for physicians who will provide them with sympathetic evaluations. In this article we use data from the California workers' compensation system on competing physician evaluations for the same injury to study the extent to which the ability to select a physician results in a more favorable disability rating. We find that disability ratings based on evaluations from physicians selected by the applicant are 23 percent higher than those based on a neutral evaluation, while ratings based on a defense physician's evaluation tend to be about 5 percent lower. Moreover, we match these data to earnings loss data and estimate the extent to which applicant, defense, or neutral ratings best predict the outcomes of injured workers. The neutral ratings appear to do the best job of predicting earnings losses overall, though not by a substantial margin.

Suggested Citation

  • Seth A. Seabury & Robert T. Reville & Frank Neuhauser, 2006. "Physician Shopping in Workers' Compensation: Evidence from California," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 3(1), pages 47-77, March.
  • Handle: RePEc:wly:empleg:v:3:y:2006:i:1:p:47-77
    DOI: 10.1111/j.1740-1461.2006.00062.x
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    References listed on IDEAS

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    1. Boden, Leslie I, 1992. "Dispute Resolution in Workers' Compensation," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 493-502, August.
    2. Roos, N.P. & Roos, L.L., 1981. "High and low surgical rates: Risk factors for area residents," American Journal of Public Health, American Public Health Association, vol. 71(6), pages 591-600.
    3. Robert T. Reville & Robert F. Schoeni, 2001. "Disability from Injuries at Work: The Effects on Earnings and Employment," Working Papers 01-08, RAND Corporation.
    4. Jonathan Gruber & Maria Owings, 1996. "Physician Financial Incentives and Cesarean Section Delivery," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 99-123, Spring.
    5. Robert T. Reville & Robert F. Schoeni, 2001. "Disability from Injuries at Work The Effects on Earnings and Employment," Working Papers DRU-2554, RAND Corporation.
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