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.

Workers’ compensation costs continue to increase in California. The written premiums of workers’ compensation insurers’ increased to about $8.3 billion during the first nine months of 2011, an increase of approximately 12% from 2010. The average cost of a lost-work claim in 2010 will be about $65,000, which is about equal to the average cost of a lost-work claim in 2009, but reflects an increase of more than 40 percent since the full implementation of reforms in 2005.

Some good news for employers - the California Department of Industrial Relations recently announced a reduction in the assessments that California employers will pay in 2012. All California employers pay assessments in addition to their workers’ compensation premiums (or paid benefits) to fund the operation of the workers’ compensation system and other activities. The 2012 assessment of $291.6 million reflects a 28 percent reduction from the $404.9 million collected in 2011. The reduction in assessment rates is attributed to credits for previous over-collections, reduced costs attributed to fiscal controls to DIR overhead costs, and a hiring freeze and employee furloughs.

California ranks 46th in business friendliness as measured by 44 different tax and public policy issues, according to a new study from the Small Business and Entrepreneurship Council. Among the organization’s measurements were state workers’ compensation costs, for which California ranked as the 10th most expensive per $100 of payroll.

The use of physician networks to provide medical care to injured workers in California has continued to grow over the past five years and now stands at a record high, according to a study from the California Workers’ Compensation Institute. The networks were created as part of the 2004 reforms to California’s workers’ compensation system to improve quality and manage costs. According to the report, the number of injured workers treated within medical provider networks jumped from 51 percent for accidents in 2004 to more than 75 percent for claims in 2009.

Opioid and narcotic use in workers’ compensation is in the news again, this time for what companies and workers’ compensation insurers are doing to help fight abuse. This is a big issue in California’s workers’ compensation system, as a relatively small percentage of medical providers are responsible for the vast majority of Schedule II opioid prescriptions (such as oxycodone and methadone) and the associated payments. Research shows just 3 percent of the prescribing physicians accounting for 55 percent of all Schedule II prescriptions. To help fight this problem, insurers, brokers and third-party administrators are working with primary physicians to help wean claimants off Schedule II narcotics if they start to develop a dangerous dependence on such drugs.

Christine Baker has been officially appointed director of the Department of Industrial Relations (DIR) after being appointed acting and chief deputy director back in March. Employers and labor representatives look forward to working with her, as she has been in leadership positions within DIR since 1984 and is very familiar with the workers’ comp and health and safety communities. Congratulations to Director Baker!

Happy Holidays from the Workers’ Compensation Action Network. We look forward to working with you in 2012.

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