Study Reports Continuing Rise in Calif. Workers’ Comp Claims Costs

A new study by the Workers Compensation Research Institute (WCRI) indicates California workers’ comp claim costs increased at a double-digit rate, growing by 11 percent between 1997 and 1998 (as of 1999 experience). The study points out that both medical costs and income benefit costs grew at significant rates.

According to the WCRI, more cost drivers were identified in California than in any of the other seven large states researched. Among these cost drivers were:

— High and lengthening time away from work

— A high and growing share of claims receiving permanent disability payments or lump sum settlements

— Benefit delivery expenses (litigation, claim adjusting, medical cost containment expenses) are high and growing rapidly

— Frequent use of relatively expensive vocational rehabilitation services

— Growing litigation

According to the study, more than 50 percent of claims in California from 1996, as of mid-1999, had lump sum payments or payment for permanent disabilities, tied with Texas as the highest percentage of all states in this eight-state study. That percentage jumped six percentage points since 1994. The other states in the study, which represent 40 percent of the nation’s workers’ compensation benefits, are Connecticut, Florida, Georgia, Massachusetts, Pennsylvania, Texas and Wisconsin.

The average duration for a temporary disability claim in California is 14 weeks, a two-week increase since 1995, and nearly double the duration in Wisconsin and Connecticut, study states with the lowest per-claim income benefit costs. The percentage of claims with more than one week of lost time increased two percentage points from 1996 to 1998.