Workers' Compensation and Family and Medical Leave Act Claim Contagion

At $60 billion per year, the workers' compensation system has come under increased scrutiny as firms, insurers, and researchers study the dynamics of claim filing. The Family and Medical Leave Act also covers most workers, and there has been very little research concerning the effects of FMLA legislation on employment. One hitherto neglected research area in both workers' compensation and FMLA is claim contagion. That is, as a claim is filed within a workgroup, does this increase the likelihood that others within the same workgroup will also file claims? We find the answer to be yes. We also find that this contagion effect is subject to diminishing returns to scale, however, in the sense that the claims probability increases at a decreasing rate as fellow employees' claims frequency increases. We argue that this is consistent with a model in which workers learn about filing a workers' compensation or FMLA claim from other workers.