Dear WCAN Member,

As part of WCAN’s mission to keep its members informed of recent events and trends affecting California’s workers’ compensation system, following is a brief summary on the latest news.

Insurance Commissioner approves workers’ compensation pure premium rates for 2012. On November 4, Insurance Commissioner Dave Jones approved an average pure premium rate of $2.30 per $100 of payroll for workers’ compensation policies starting or renewing January 2012. The commissioner’s decision marks a slight reduction when compared to the average rate insurance companies charged California employers in the first quarter of 2011, which was $2.38 per $100 of payroll. Benchmarking against currently charged rates, rather than previous pure premium rates recommended by the Workers’ Compensation Insurance Rating Bureau, was part of a number of procedural changes adopted for this review process.

In his decision, the commissioner pointed out that the pure premium rate only measures how much insurers would need to charge, on average, to cover the cost of future benefits and adjustment expenses. It is not binding on the rates individual insurers file to cover their anticipated costs or what premium individual employers might pay. The commissioner also pointed out that the rates filed with the Department are being substantially discounted, demonstrating that “competition has been effective in holding down workers’ compensation premiums” and has kept prices generally stable for employers. However, the commissioner cited concerns over increasing costs in the system, including medical costs and liens, and promised to work with the governor and legislature on further efforts to reduce frictional costs.

California Supreme Court rejects review on Ogilvie, last in trio of costly permanent disability cases. On October 26, the Supreme Court made it official that it will not review any of three highly disputed cases over how California’s Permanent Disability Rating System may be challenged and overturned. The trio of rulings initially handed down by the Workers’ Compensation Appeals Board in 2009 in cases known as Almaraz, Guzman and Ogilvie allow for subjective, individualized ratings and came with an estimated cost of $800 million due to higher litigation and benefit costs. Moving to a more objective rating system based on guides published by the American Medical Association was a key feature of the 2004 reforms overwhelmingly approved by the legislature. With the Supreme Court’s denial, these rulings remain in effect. Recent statistics show an increase in litigation and longer duration of claims in California’s system.

Maximum Temporary Disability benefit increases to $1,010.50 per week for 2012. Due to indexing with changes in the Statewide Average Weekly Wage, the minimum and maximum temporary total disability rates will increase on January 1. The minimum TTD rate will increase to $151.57 and the maximum TTD rate will increase to $1010.50 per week. Since 2003, when legislation was enacted to increase benefits, the maximum TD rate has increased by more than 100 percent.

Be sure to watch the recent webinar from WCAN in conjunction with the California Coalition on Workers’ Compensation. The webinar reviewed Gov. Jerry Brown’s actions on workers’ compensation legislation sent to him this year and offers an outlook on California’s workers’ compensation system in 2012 and beyond.

Please contact us with any questions or comments at contactus@fixworkerscompnow.org.