Brief Overview of the Arizona Workers' Compensation Statutory Scheme

Historical Context

Before the enactment of Arizona's workers' compensation statutes, injured workers had to file civil actions against their employers to seek compensation. This required proving employer negligence and navigating defenses like contributory negligence and assumption of risk. The litigation process was lengthy, leaving injured workers without means to cover medical expenses or lost wages.

Early Statehood and Mining Industry Influence

In Arizona's early statehood, the mining industry was a significant economic driver but also a dangerous occupation. Many injured miners filed civil claims against their employers. Frustrated with the legal costs, the mining industry pushed for a constitutional amendment to establish a mandatory workers' compensation system. This amendment, now Article 18, Sec. 8 of the Arizona Constitution, was passed, making Arizona one of only two U.S. jurisdictions with a constitutionally mandated workers' compensation system.

System Design and Challenges

The workers' compensation system was designed to provide medical and wage loss benefits to injured workers in exchange for relinquishing the right to sue employers. It was intended to be a "no-fault system" with a simplified hearing process for quick adjudication by a hearing officer or administrative law judge. However, the system's simplicity on paper did not translate into practice.

Benefits Under the System

An employee injured in the course of employment is entitled to have all medical expenses covered by the insurance carrier or self-insured employer. They also receive disability benefits as a substitute for lost wages. During active treatment, injured workers can receive temporary total disability benefits, amounting to 66 2/3rds of their average monthly wage, up to the statutory maximum. If on light duty, they receive 66 2/3rds of the difference between their average monthly wage and their earnings in the open labor market.

Permanent Impairment and Disability

Once an injury stabilizes and no further active medical care is necessary, the claim is closed with a determination of permanent impairment. A finding of permanent impairment is required for permanent disability benefits. If the impairment is confined to areas listed in A.R.S. § 23-1044(B), the worker receives a sum based on a statutory formula.

For impairments to multiple or unlisted body parts, compensation is on an unscheduled basis. The Industrial Commission of Arizona assesses the injured worker's earning capacity considering limitations, work history, education, age, and previous disabilities. If unable to return to meaningful employment, the worker is deemed permanently and totally disabled, receiving 66 2/3rds of their average monthly wage. If returning to work in a reduced capacity, they receive 55% of the difference between their average monthly wage and potential earnings.

Lifetime Benefits and Dispute Resolution

Workers' compensation benefits are lifetime in nature. After case closure, supportive medical benefits may be awarded. If further active medical care is needed, a petition to reopen the claim can be filed. For changes in earning capacity due to injury residuals, a Petition for Rearrangement can be filed by either the worker or the employer.

Disputes during claim processing can lead to a Request for Hearing, intended to be an informal process for expeditious resolution with minimal time and expense.